The Reserve Bank of Australia meets this week and there is nearly universal support for a 25 bps rate hike. The Short Term Interest Rate Markets are projecting an 82% chance of a 25bps rate hike. Economists are in agreement and the most recent Reuters poll shows 27 out of 28 economists also forecast the RBA to hike by 25bps to 3.60% next week. Recent inflation data from Australia has been strong and the country has not yet seen a peak in either the headline or the core inflation readings indicating the RBA has more work to do.

Therefore, the RBA is expected to hike despite the recent slowdown in labour data. However, if the RBA starts to signal signs of slowing down in this week’s interest rate meeting then watch for some potential AUDNZD downside. RBA decision is on Tuesday, March 7 at 03:30 GMT.

AUDNZD has a seasonally weak time of the year with a 60% winning AUDNZD sell bias over the last 15 years.

Major Trade Risks: The biggest risk here is if the RBA gives a more hawkish outlook at the RBA meeting next.

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