Will Reserve Bank of Australia take cues from its counterparts – ECB, BoE, BoC, RBNZ and turn hawkish tomorrow? The stage looks set for the RBA to ditch its neutral stance, expect for the fact that the AUD is up 6.9% from its December close of 0.72. AUD/USD could easily jump 300 pips to 0.8 if the RBA comes out hawkish…that would only add to the central bank’s exchange rate concerns,
It is advisable to stay on the sidelines as far as AUD is concerned. One thing is sure, the spot is likely to see big move tomorrow. RBA is expected to turn hawkish, and that could yield a 300 pip move over the next week or so. On the downside, 0.74 could be revisited if the RBA retains the neutral tone.