Tomorrow’s rate decision is speculated to show us another rate cut. Another 25 basis points would put the AUD at 2.75%, only 25 basis points away from New Zealand’s rate.
The AUD/USD has seen very little volatility in recent months (compared to Yen pairs), but can most definitely be affected by an additional rate cut tomorrow.
Chances of a Rate Cut
“There is more chance of a rate cut on Tuesday than markets are pricing in,” according to Ray Attrill, the co-head of foreign exchange strategy at National Australia Bank.
“After the CPI (Consumer Price Index) numbers (released) in January we thought that tilted the balance in favor of a move in February, having previously anticipated a move in March,” Attrill said, adding: “Our view is that the Australian economy is much weaker than generally understood.” (CNBC)
A rate cut on Tuesday could enforce this weakness and push the AUD even lower against the U.S. Dollar for Forex Trading.
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