The Reserve Bank of Australia’s (RBA) policymakers struggled to tame the treasury yields by extending the Quantitative Easing (QE) during March. However, risk-on mood and the latest consolidation of the global bond coupons should favor the Aussie central bank to maintain status-quo during the April month monetary policy meeting, up for publishing around 04:30 GMT.
That said, recently strong Aussie fundamentals may warrant the RBA to wait for a bit more before announcing any policy change. Though, AUD/USD traders will be keenly watching over the clues of reflation fears and employment data, not to forget the future path, while checking the RBA statement.
Westpac follows market sentiment while saying,
We expect the RBA will maintain current policy settings at the April Board meeting (2:30 pm Sydney/12:30 pm Sing). These settings include: 'targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program'.
On the same line, FXStreet’s Valeria Bednarik said,
Markets are optimistic about their return after a long weekend, weighing on the greenback. US Treasury yields are on the rise, which may end up benefiting the American currency in the next few hours. Ahead of the RBA, the pair is mildly bullish in the near term but overall neutral. In the 4-hour chart, it is above a flat 20 SMA, while the longer moving averages head modestly lower above the current level. The pair could advance towards the 0.7730/70 price zone on a break above 0.7675, while a disappointing outcome and a break below 0.7600 could see the pair retesting the year low at 0.7531.
How could the RBA decision affect AUD/USD?
AUD/USD stays mildly bid around 0.7650, up 0.10% intraday, ahead of the key monetary policy decision, while cheering the risk-on mood. Should the RBA step back from upbeat economic analysis, which is less likely, the quote can again eye the 0.7560-55 support zone comprising neckline of the short-term head-and-shoulders. Meanwhile, a daily closing beyond 100-day SMA, around 0.7640, enables AUD/USD buyers to keep their eyes on the mid-March low surrounding the 0.7700 threshold.
Key quotes
AUD/USD: Bulls cheer upbeat markets around mid-0.7600s, RBA in focus
Reserve Bank of Australia Preview: Optimistic but on hold
About the RBA interest rate decision
RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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