CBA Provide Some AUD Scenario Analysis Ahead Of Today’s RBA

CBA write “the RBA’s decision to hike or pause and their post meeting communication can have varying impacts on the AUD/USD today.”

• “Our base case is for the RBA to leave the cash rate on hold at 3.60% but maintain a hawkish policy stance. In this case we think AUD/USD can lift modestly by 30‑50 pips.”
• “A second option would be for the RBA to raise interest rates by 25bps taking the cash rate to 3.85%. A 25bp increase with a tightening bias could see a large 1 cent move in AUD/USD. However, a 25bp increase with dovish communication would see a much smaller increase in AUD/USD.”
• “Another possible option would be 15bp increase taking the cash rate to 3.75%, if for no other reason than to return the cash rate to a more conventional metric. A 15bp lift would likely send the signal that the RBA is planning to pause in their tightening cycle and can see the AUD/USD little changed.”