In the Asian session on Tuesday (April 4), AUD/USD fell to 0.6783, a drop of 0.04%. According to institutional analysis, the Reserve Bank of Australia kept interest rates unchanged, and the Australian dollar only weakened slightly. The room for Australian dollar depreciation seems to be limited, because looking at this statement, you will find that the possibility of raising interest rates in May is reasonable.
Before the interest rate decision, the market’s expectation of a rate hike at today’s meeting was only about 5 basis points, and the peak rate hike around the May meeting was only 10 basis points. Therefore, the RBA’s decision to leave interest rates unchanged is not a surprise.
Also, the statement included the line: “The Committee anticipates that further tightening of monetary policy may well be needed to ensure that inflation returns to target,” but that was also hawkish enough to warrant further rate hikes in May . Therefore, there is little reason for the Australian dollar to sell off sharply.
