Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

RBA March Meeting Minutes preview and what comes next for the AUD/USD

At the meeting, the RBA raised the cash rate by 25bp from 3.35% to 3.60% and softened its month-old hawkish guidance.

Source: Bloomberg

Release date

Wednesday, 21st of March at 11.30 am, AEDT will see the release of the minutes from the RBA’s March Board meeting. At the meeting, the RBA raised the cash rate by 25bp from 3.35% to 3.60% and softened its month-old hawkish guidance.

The dovish backflip came following softer-than-expected growth numbers for the December quarter, lower-than-expected wages growth and an easing in the monthly CPI indicator, including sharp falls for new dwelling costs, holiday travel and clothing.

What to expect?

In a speech the very next day, the RBA Governor Philip Lowe noted that while further tightening of monetary policy would be required to bring inflation back to target, the RBA Board discussed that they were close to the point where “it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy.”

The meeting minutes will therefore be scanned for more details about the RBA’s dovish shift, including what moves in interest rates it considered at the Board meeting and the criteria around them.

In some respects, the past week's events have made the RBA’s dovish shift and talk of a pause timelier. For the better part of 12 months, central banks have been attempting to play catch up to the expectations of higher rates priced into interest rate markets.

AUD/USD

Following the events in banking over the past week, interest rate markets are now pricing in rate cuts. Here in Australia, the expected RBA terminal rate, which was at 4.19% a few weeks ago, is now at 3.60% and includes a full RBA rate cut by August.

In theory, expectations of a lower RBA cash rate undercuts support for AUD/USD. However, a similar dovish repricing has occurred in the US rates market. One more Fed rate hike is expected this week, taking the Fed Funds to a range of 4.75% - 5% before 100bps of rate cuts into early next year.

AUD/USD technical analysis

In our most recent article on the AUD/USD here last week, we noted that while the pair had been given plenty of reasons to trade lower towards .65c (dovish RBA, hawkish Fed, risk aversion selling), the downside follow-through we had been expecting had not yet eventuated.

Its downside progress was further impeded into last week's end by the release of robust AU labour force data and a surprise PBOC 25bp RRR cut on Friday.

Nonetheless, while the AUD/USD remains below the 200-day MA and a sequence of highs in early March .6765/85 area, we remain with the bearish bias looking for a test and break of .6500c. Aware that should the AUD/USD see a sustained move above resistance at .6565/85, it would negate the bearish bias and allow a more constructive picture to emerge.

AUD/USD daily chart

Source: TradingView
  1. TradingView: the figures stated are as of March 20th, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.