Halister News

(Bloomberg) -- A test of the 0.7676 July 15 high may be seen in reaction to pricing disparity between forecasters and markets over Tuesday’s RBA decision, Bloomberg strategist Michael G. Wilson writes.

• RBA will cut cash rate to 1.5% from 1.75%, according to 20 of 25 economists in Bloomberg survey; the rest see central bank on hold; announcement due at 2:30pm local time
• OIS are pricing in 67% chance of a cut, suggesting traders are less confident than the 80% of economists that expect easing
• In executing their hedging requirements, clients typically consider outlooks and views of economists’ notes received from their banks almost every day.
  • An Australian exporter for example may hold back on buying A$ given the high probability of a cut forecast by their banks’ research departments over that of actual traders’ pricing
  • In the event the RBA doesn’t cut rates or signal further easing or both, A$ could surge to breach last month’s high as exporters scramble to cover their positions
• A Friday close above the 0.7651 100-WMA would set AUD/USD up for a tilt at 0.7835, the April 21 high
• NOTE: Michael G. Wilson is an FX strategist who writes for First Word; the observations he makes are his own.