Australian Cash Rate Update

Australian Cash Rate Update

What will happen?

The Reserve Bank of Australia will announce its cash rate and make a statement about future rate policy on Tuesday, June 7, at 07:30 MT. This release comes out every first Tuesday of the month. The cash rate is charged on overnight loans between financial intermediaries. The major event for AUD!

Possible AUD moves

Last month, on May 3, the Reserve Bank of Australia said it would raise interest rates by 25 basis points to 0.35%, the first time since November 2010. Analysts had expected the central bank to raise rates given the rapid inflation rise. Although inflation has risen more than expected, it remains lower than most other advanced economies. In the last quarter, prices for food, gasoline, and other consumer goods rose.

After the previous release, the first five minutes showed a significant jump up to 650 points. If you traded 1 lot here, you would have earned $650.

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How to trade on the Australian cash rate release?

If the actual reading is bigger than forecasted, it’s good for the currency. Therefore, a surprise rate hike will propel AUDUSD. Moreover, the AUD will get higher if the RBA is optimistic about the national economy. Conversely, if the RBA is cautious and doesn’t hint at the upcoming rate increases, the AUD will move down. Due to RBA sentiment, another raise from 40 basis points to 0.75% seems very likely at this board meeting.

Check the Economic Calendar.

Instruments to trade: AUDUSD, AUDCHF, AUDNZD, AUDJPY.

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