Currency Analyst since 2010

AUD/USD awaits RBA desision

By Elizabeth Belugina

Lower US dollar gave boost to commodities and commodity currencies. Australian dollar, however, fell behind New Zealand’s and Canadian currencies. The thing is that Australia’s inflation rate survived the biggest decline in 7 years. This piece of data strengthened expectations that the Reserve Bank of Australia will cut rate on Tuesday, May 3.

The inflation rate of 1.3% is well below the RBA’s target range of 2-3%. Let me remind you that lower interest rate makes money cheaper and, as a result, increases inflation. As a result, rate cut expectations are reasonable. These expectations will keep Australian dollar under pressure at the beginning of the weak.

If the RBA cut rate, we’ll see further decline of AUD/USD to 0.7430/00. If there’s no cut, AUD/USD will rise to 0.7700 and 0.7800/30. Later next week pay attention to Australia’s retail sales and trade balance on Thursday. 

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