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    RBA: pause in the easing cycle

    Before the Reserve Bank of Australia (RBA) meeting in April market projected a 75 percent chance of the second interest rate cut by the Australian central bank this year. These expectations didn’t come true – the rate remained unchanged at 2.25%.

    Another disappointment awaited those who bet on the AUD/USD decline this week: the Australian quarterly inflation report turned out to be stronger than expected. And the RBA Governing Council meeting minutes, released the day before this report, showed that the central bank was ready to allow further easing, if inflation dynamics suggested this solution.

    Now analysts one by one shift their expectations of the RBA rate cut to the second half of the year. I agree with such correction of forecasts. On 10 February, I already wrote in this blog that winter rate cut leaves the possibility for another such step later this year. However, unlike the majority, I did not expect this event to take place in the first half of the year. I think that after the February easing RBA will pause for at least six months to evaluate the response of the economy to the measures taken. Thus, we shouldn’t expect any rate cuts from the Australian Central Bank until August.

    In the meantime, while the RBA took a pause, the AUD/USD can take a trip to the “north” and test 0.79 mark in the second quarter.

    AUDUSDWeekly23-4-15

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!

    Before the Reserve Bank of Australia (RBA) meeting in April market projected a 75 percent chance of the second interest rate cut by the Australian central bank this year. These expectations didn’t come true – the rate remained unchanged at 2.25%.

    Another disappointment awaited those who bet on the AUD/USD decline this week: the Australian quarterly inflation report turned out to be stronger than expected. And the RBA Governing Council meeting minutes, released the day before this report, showed that the central bank was ready to allow further easing, if inflation dynamics suggested this solution.

    Now analysts one by one shift their expectations of the RBA rate cut to the second half of the year. I agree with such correction of forecasts. On 10 February, I already wrote in this blog that winter rate cut leaves the possibility for another such step later this year. However, unlike the majority, I did not expect this event to take place in the first half of the year. I think that after the February easing RBA will pause for at least six months to evaluate the response of the economy to the measures taken. Thus, we shouldn’t expect any rate cuts from the Australian Central Bank until August.

    In the meantime, while the RBA took a pause, the AUD/USD can take a trip to the “north” and test 0.79 mark in the second quarter.

    AUDUSDWeekly23-4-15

    Dear traders, please post your comments to our forecasts and share your own opinion. Your ideas can be very helpful for the newcomers in the forex market. Thank you!


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