Assistant governor of the RBA says official interest rates will rise further but the AUD remains in the doldrums, unmoved at .9181.

That is according to the well know RBA-watcher Terry McCrann who has been very accurate in his predictions over the last few months.

Thoughts of well-respected RBA watcher.

The AUD/USD has slipped slightly after the release of minutes from the last RBA meeting. Support around .9100 with heavy stops rumoured below .9050.

I’m not sure whether this is a bullish or bearish sign. On the one hand, the market has again shown a strong propensity to bounce straight back after a sell-off but on the other hand the fact that one set of stops was done might suggest that the next set undet .9050 will also get done. Either way, I’m still in the buy-big-dip camp. RBA minutes from the last meeting will be released at 11:30 Sydney time.

A Reuters poll of professional analysts suggests that the RBA will pause in April before hiking by 25 bps in May. The futures market would seem to agree with this assessment.

A somewhat unusual move after the announcement. The AUD/USD peaked at .9030 before slipping back quickly to .8960. Either the market was very long going into the announcement or the subsequent statement is being seen as signalling a pause. Something I don’t see yet.

If you’re overly short, this might be a good opportunity to reduce. A break below yesterdays .8935 low would suggest to me that the market is really long.

Citibank are sticking to their view that, due to international factors, the RBA will not hike rates this afternoon. This view is in the minority but it explains why the punters are in the market. Uncertainty breeds volatility breeds opportunity.

The liklihood is that the RBA will hike rates by 25 bps at 2:30 this afternoon Sydney time. If they do, then the market will target stops above .9070. If they don’t, then we might see a bigger move down as longs bail out. Nevertheless, as Jamie wrote earlier, the commodity currencies are looking particularly attractive in the current environment and any major dips will be very well supported.

Good luck today.

The AUD has had some big moves recently just after RBA meetings and I expect that trend to continue. The short term range should be contained inside a broad .8800/.9050 range until the meeting tomorrow and the market will likely break heavily one way or other after the event. The general expectation is that the RBA will return to their hiking cycle but international factors may yet persuade them to pause.

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