When is the RBA's SoMP and how could it affect AUD/USD?

RBA's SoMP review

The RBA statement on monetary policy that will provide updated forecasts and discussion on growth and inflation. This is due at 0130 GMT, (or 11:30am Syd/9:30am Sing/HK). 

Following RBA Governor Lowe's upbeat speech on economic prospects earlier in the week, at least a neutral bias is expected from the statement. However, there could well be a bias leaning hawkish based on the Q1 CPI result that arrived a little stronger than the RBA had been expecting, although that hasn't moved expectations of inflation to move any higher in the 2-3% target in the medium term.

Analysts at NAB:

Underlying inflation for June and Dec 18 might be lifted ¼% to 2%. The question will be of any change to 2019 (and 2020).

However, there has also been some evidence that the labour market is performing better with strong labour market participation of late. 
 
Analysts at Westpac noted that we have of course heard plenty from the RBA this week – the statement after the monthly meeting and a speech by Governor Lowe:

"Hence the main interest in the SoMP will be its forecasts. Even these could be received calmly by markets, given that Governor Lowe has previewed that, “The latest forecasts should not contain any surprises, with only small changes from the previous set of forecasts”. In Feb, the RBA saw GDP growth of 3.25% over the year to Dec 2018 and to Dec 2019, plus a low 1.75% on underlying inflation in the year to Dec 2018. Perhaps a “small change” will be made to one of these."

How could the RBA's SoMP affect AUD/USD?

Despite a recent pop in the Aussie, the technical picture remains bearish while the price is still changing hands below the 10-D SMA. The monthly RSI is biased down and the price has slipped below the monthly/daily trend line support, held up at a sticky resistance level in the correction. However, on a hawkish outcome, the pair could get up to test the 50-4h SMA at 0.7548 with sights on the 100-4hr SMA and a previous support level a cent higher, (end of March low). To the downside, 0.7420 and ultimately, the 2001-2018 uptrend at .7142 is the wider objective for the bears to target. 

Key notes:

• Fundawrap: Fed, geopolitics and nonfarm payrolls spark up market jitters

"From a fundamental take on today's markets, investors have been cautious ahead of Friday's nonfarm payrolls while keeping an ear to the ground with some geopolitical headlines circulating relating to Washington's relationship with Bejing."

• AUD/USD analysis: aiming to correct higher, watch 0.7550

"The 4 hours chart shows that the pair is trying to settle above a bearish 20 SMA, while the Momentum indicator entered positive territory and the RSI advances around the 52 level, favoring additional recoveries in the case of an extension above the mentioned Fibonacci resistance."

About the RBA's SoMP

The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negatvie (or bearish).