The much anticipated RBA statement for the month of Feb just released a few hours ago and boy was it a market shaker. In our weekly forecast yday, we did highlight this news as one of the important news of the week and sure enough it was.
Flashback a bit. RBA was the first central bank to raise its interest rates since the post financial crisis era and it has since raised its interest rates by 25 bps not once, not twice, but 3 times! This makes the Australian currency the highest yielding currency currently at 3.75%.
Overview of Central Bank Rates
Now, this is the absolutely ridiculous way that the market expects things to happen. After being the first central bank to do something very bold in my opinion, especially during such times where recovery isn’t quite complete or past the “safety” mark. it has exceeded expectations again and again by doing the same hike upwards for 3 months in a row. After a breather in Jan, the market expects RBA to hike the rates up again by another 25bps to 4.00%
Guess what, it didn’t quite happen and the reaction was a quick selloff for almost a good 140 pips. It has recovered now about 30 pips and ranging around .88-8820 zone.
As usual, we didn’t have a bias and took the side which broke out and the trade worked out very well for us close to a 100 pips. This is a screenshot of the system in drawing and the trade results that followed.
Aud RBA News Breakout 2nd Feb
