Australia Interest Rate discussion
AUINTR The Reserve Bank of Australia has not yet reduced interest rates. However, a closer examination reveals that the pace of its balance sheet reduction has accelerated significantly in recent months, effectively serving the same purpose as an interest rate cut.Given the Federal Reserve’s recent rate cut and the Bank of England’s decision to maintain its rates, both currently at 5%, it is likely that the Reserve Bank of Australia will also keep its interest rate unchanged at 4.5% in the coming days.
Furthermore, considering the relatively strong employment data in Australia, the idea of not reducing the interest rate is further reinforced. From a technical perspective, the AUD/USD pair is at the upper end of its multi-month descending channel. If the Reserve Bank of Australia does not cut interest rates, this ceiling could be broken, although U.S. data could influence and prevent this.
However, if our entire analysis is incorrect and the Reserve Bank of Australia decides to cut interest rates to keep up with other countries that are lowering rates these days, this currency pair could drop sharply and move from the channel’s ceiling to its mid-range.