When is the RBA Interest Rate Decision and how could it affect AUD/USD?

It’s the Reserve Bank of Australia (RBA) Tuesday yet again, September 7, with the monetary policy decision due to be announced at 0430 GMT.

Its going to be an interesting verdict from the RBA, as it tries to balance the negative impact of the Delta covid variant-led lockdowns on the economy while sticking to its tapering plan from this month.

Last month, the Australian central bank left the official cash rate (OCR) at a record low of 0.10% and pledged to purchase government securities at the rate of $5 billion a week until early September and then $4 billion a week until at least mid-November.

However, the RBA said that it will continue with tapering of the bond-buying programme after early September.

Ever since the August policy decision, the covid situation in Australia has worsened, with cases rising relentlessly in the country’s most populous state of New South Wales (NSW), as lockdowns keep getting dragged forward.

Therefore, it may not come as a surprise if the central bank walks back on its tapering announcement, with the Q3 GDP likely to contract after strong Q2 growth figures.

How could the RBA decision affect AUD/USD?

A dovish RBA is partially priced in, so chances of a steep decline are limited. Supports come at 0.7400 and 0.7370. A hawkish surprise could push the pair through the mentioned 0.7477 level towards 0.7510. The pair may have a hard time retaining gains above the latter, but if it does, the advance could continue in the upcoming sessions toward the 0.7560 price zone,” FXStreet’s Chief Analyst, Valeria Bednarik explains.

At the time of writing, AUD/USD is trading modestly flat at 0.7440, retreating from two-month highs of 0.7456, as investors turn cautious ahead of the RBA decision.

Key quotes

A covid-tantrum on the cards for today's RBA

Reserve Bank of Australia Preview: Focus on tapering and growth

AUD/USD retreats below 0.7500 on China trade data, RBA eyed

About the RBA interest rate decision

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 rises 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.