The Governing Board of Directors of the RBA is meeting tomorrow for its monthly monetary policy gathering. They will be deliberating on the most appropriate interest rate that is to be implemented in light of the recent developments globally.
The consensus forecasts project no changes to the underlying interest rate, which is currently standing at 0.75 per cent.
Yet, the spread of the coronavirus globally has illuminated the vulnerability of the Australian economy and its dependence on the well-being of the Chinese economy.
The Governing Board might be compelled to consider reducing the rate by 0.25 basis points in March in a bid to support even more the reeling national economy. Such actions would also be justified as a pre-emptive measure in case the situation continues to deteriorate.
The Aussie, which has been the most substantially hit major currency so far in 2020, has halted its short-term losses for the time being, on the expectations for tomorrow’s monetary policy statement.
The price action of the AUDUSD shows early signs of a potential reversal as well. The MACD has already started demonstrating rising bullish momentum, and the long lower shadows of the most recent candlesticks on the 4H chart confirm the bullish sentiment.
AUDUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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