Trading The AU RBA Interest Rate Decision, October 31, 2016
AU RBA Interest Rate Decision today is likely unchanged due to the current stagnation of inflationary pressure and lack of market momentum. On an off chance of a surprise, we should see plenty of market volatility, but of course it is highly unlikely.
11:30pm (NY Time) AU RBA Interest Rate Decision Forecast 1.50% Previous 1.50% DEVIATION: 0.25% (SELL AUD 1.25% / BUY AUD 1.75%)
The Trade Plan The market does not expect any changes but If RBA decides to cut interest rate by 25 basis points, we sell AUD… If RBA decides to raise rates to 1.75%, we’ll buy AUD.
Important Note: The only time I´d recommend a spike trade is when there are so much momentum pushing this currency that regardless of spread and slippage, you should end up in profit if you just hold on to the trade.
I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: AUD/USD.
Outlook ScoreOutlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
DefinitionAustralian RBA interest rate is often refers to as the “cash rate target”, also called the official cash rate (OCR) or cash rate. This is the Australian base rate. Banks pay this interest rate when they take out a loan with a maturity of 1 day from another bank. By buying or selling bonds and other securities issued by the government the RBA can influence the money supply and thus the cash rate target. A rise or fall in the cash rate often also leads to a change in the interest rates for mortgages, loans and savings.