Profit Mongers @ 6:05 PM, Monday December 05 2011
23:30 AUD Interest Rate Decision (4.5% exp, 4.75% prior, 4.50% to 4.75% range)
13 out of 25 analysts expect the RBA to cut rates again by 25 bps to 4.25%, while the
remaining 12 expect them to hold rates steady at 4.5%. Last months 16 of 27 expected
a cut, while 11 expected a hold, so the overall median estimate was for a cut. And
cut they did do and the AUDUSD dropped 50-60 pips over 5 minutes, including a 25-30
pip pullback after 2-3 minutes giving a nice afterspike opportunity. Today the
expectations are more evenly distributed so there should be a guarenteed trade as if
they do hold instead of cut the Aussie should rally as some have now priced in a cut.
However a confirmation of these expectations of a cut should make a better short than
the buy generated from not cutting as things still remain grim in terms of risk appetite
accross the global economy. Many important decisions are expected out of Europe this
week so while things should remain quiet thru the Asian sessions the rumors & headline
driven market should continue when Euroland wakes up for business a just an hour or 2
after this release.
If they hold rates, AUD/USD & 6A should rally 30-60 pips/ticks.
If they lower rates, AUD/USD & 6A should sell off 40-80 pips/ticks.
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