What's the Australian dollar trade
Credit Agricole CIB Research discusses its expectations for tonight's RBZ policy meeting.
"The RBA will leave its YCC parameters unchanged this week and will likely continue to sound optimistic in its rhetoric pointing to monetary policy working as expected and a faster economic recovery than expected.
The RBA's silence on the AUD in its previous policy statement was read by investors as giving the greenlight to the currency's rally and allowed it to rally further. Since then, RBA Governor Philip Lowe has said that it is hard to argue that the currency is overvalued, while RBA Board member Ian Harper has said that AUD/USD back above 0.70 would be unhelpful," CACIB notes.
"The market will be watching to see if the RBA begins drawing a line in the sand for the currency. Given that Lowe was the leader in international forums arguing against central banks cutting interest rates in order to get weaker currencies, it will be difficult for him to speak out loudly against the AUD's strength," CACIB adds.