What is the RBA rate decision and how could it affect the AUD/USD?

The Reserve Bank of Australia (RBA) will announce its April interest rate decision at 04:30 GMT.

RBA to maintain the neutral stance

The central bank is widely expected to keep interest rates unchanged and will likely maintain a neutral stance, courtesy of stubbornly low wage growth and high household debt. RBA's comments on rising short-term funding costs, trade wars and the recent drop in the iron ore prices will be eyed as well.

Also, it is expected to repeat the warning that an appreciating exchange rate could result in a slower pick-up in economic activity and inflation than currently forecast.

That said, most analysts believe there will be little market-moving change if any. Anyways the markets do not expect the RBA to hike rates this year. So, the RBA will likely turn out to be a non-event for the AUD markets, unless the central bank's language indicates increased the likelihood of a rate hike in 2018.

• RBA can inject hawkish tones? - TDS

Implications for the AUD

AUD/USD has been restricted to a narrow range of 0.7640 to 0.7710 since March 28, signaling the sell-off from the March 14 high of 0.7916 may have run out of steam. The currency pair will likely keep the range if the RBA maintains the neutral stance as expected. An upside break of the trading range is likely if the RBA adopts a hawkish tone. Meanwhile, the sell-off from 0.7916 would resume if the RBA sounds dovish.

About the RBA interest rate decision 

The RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.