The Reserve Bank of Australia (RBA) will release its quarterly Monetary Policy Statement at 01:30 GMT on Friday.
Although the coronavirus (COVID-19) led lockdowns pushed the RBA to mark a dovish halt in its meeting on Tuesday, the central bank’s economic projections will be the key to watch in the statement. Additionally, the RBA Governor’s comments following the April monthly meeting minutes also highlight the importance of the event for the AUD/USD pair traders.
TD Securities provide details of catalysts worth watching in the statement:
The RBA will publish its Statement of Monetary Policy (SOMP), which will give us more details on their GDP growth, inflation and unemployment forecasts. The baseline growth scenario released alongside its policy decision on Tuesday showed a 10% decline in 20H1 GDP, with -6% growth assumed for 2020, while the unemployment rate peaks at 10% and inflation remain below 2% over the next few years.
Westpac cites the RBA Governor Lowe’s comments to highlight the event:
Of most interest will be the updated forecasts, which will outline the Bank’s expectations for the profile of the coronavirus shock and recovery. In Tuesday’s brief statement, Governor Lowe provided the broad outline: ‘In the baseline scenario, output falls by around 10 percent over the first half of 2020 and by around 6 percent over the year as a whole. This is followed by a bounce-back of 6 percent next year.’
How could it affect AUD/USD?
Although major economic projections have already been conveyed during Tuesday’s meeting, traders will check for the signs of how quickly the economy can recover. While most policymakers, including the Governor, cited increasing hopes of a U-turn during the next year, any disappointment could snap the Aussie pair’s run-up near the weekly high.
Technically, buyers keep cheering the sustained trading beyond 21-day SMA, currently around 0.6400, to aim for a 100-day SMA level of 0.6545. On the contrary, a downside break of 21-day SMA can refresh monthly low below 0.6273.
Key notes
AUD/USD probes 0.6500 amid risk-on mood, RBA Monetary Policy Statement eyed
AUD/USD Forecast: Underpinned by surging gold and plummeting yields
About RBA Monetary Policy Statement
The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negative (or bearish).
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