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|Meetings of the Reserve Bank of Australia always have a strong impact on the Australian dollar.|
|Australian cash rate remains at the record low of 1.5%, while other central banks around the world are starting a tightening cycle.|
|The RBA Governor Lowe has recently hinted that it’s “more likely” that interest rates will “go up than down”. Never the less, Australian central bank seems in no hurry to introduce higher rates. According to Lowe, flexible national currency allows the RBA to maintain independence in timing rate hikes.|
|If the RBA doesn’t give more details about the future rate increases at the meeting on October 3, the AUD will likely suffer versus other currencies, especially the EUR, the CAD and the USD. If the RBA turns more optimistic and hawkish, demand for the AUD will increase pushing its exchange rate higher.|
The ECB statement and US unemployment claims will be out today. How the market will react?
The focus of traders’ attention shifted from concerns about the virus resurgence to hopes for a US stimulus package. As a result, the market sentiment improved, driving riskier currencies and stocks to the upside.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.