The Australian and New Zealand Dollars are trading slightly better early Tuesday ahead of the release of the Reserve Bank of Australia’s (RBA) rate statement and interest rate decision at 03:30 GMT.
On Monday, both currencies finished lower after giving up earlier gains as a surge in demand for risky assets failed to impressive investors. Aussie and Kiwi traders were also a little cautious as a wave of runaway retail traders unsettled global equity and silver markets.
RBA on Tap
The Aussie is moving higher early Tuesday but gains are likely being capped by general nervousness ahead of the RBA announcements and a landmark speech outlining its policy settings for the year coming on Wednesday.
Traders expected RBA policymakers to leave its benchmark interest rate unchanged, but there is some uncertainty over the central bank’s A$100 billion ($76 billion) quantitative easing program, which expires in April.
Most analysts assume the RBA will extend the program, if only to lessen upward pressure on the Aussie, but will be looking for signs that purchases will be tapered slightly.
With other major central banks still rapidly expanding their balance sheets, any pullback by the RBA would likely see local bond yields and the currency surge higher.
Yields on Australian 10-year Government bonds were at 1.11%, the highest since January 11, having risen steadily from a low of 0.73% last October.
The “Australian Dollar may rally modestly intraday if the RBA does not hint at an announcement” this week, Commonwealth Bank of Australia traders told clients in a note on Monday. “But the overall trend is for a weaker AUDUSD this week if global equity markets continue to sink.”
Traders Preparing for NZD Employment Change & Unemployment Rate
According to a Bloomberg News survey, the New Zealand economy did not see any jobs growth in the fourth quarter of 2020, and as a result, the labor market will see its headline unemployment rate rise from 5.3% to 5.6%.
For a look at all of today’s economic events, check out our economic calendar.