Australian Greenback 1Q 2021 Forecast Upbeat as RBA Rejects Unfavourable OCR

The Australian Greenback has outperformed its US counterpart all through the fourth quarter of 2020, with AUD/USD buying and selling at its highest stage since June 2018 because the Reserve Financial institution of Australia (RBA) continues to rule out a adverse rate of interest coverage (NIRP).

Coming Quickly! Obtain the NEW 1st Quarter Forecast Reside on Monday on our Free Buying and selling Guides Web page!

It appears as if the RBA will hold the official money price (OCR) on the report low of 0.10% at its subsequent assembly on February 2 as Governor Philip Lowe and Co. insist that “we’re nonetheless of the view {that a} adverse coverage rate of interest in Australia is very unlikely, with any advantages being outweighed by the prices.”

In flip, the RBA might proceed to make the most of its steadiness sheet to assist the Australian financial system after saying plans to buy “$100 billion of presidency bonds of maturities of round 5 to 10 years over the subsequent six months” in November as “the Board will hold the dimensions of the bond buy program beneath overview, significantly in gentle of the evolving outlook for jobs and inflation.”

Supply: ASX

Nevertheless, the ASX 30 Day interbank Money Charge Futures February 2021 contract displays hypothesis for an additional price minimize, with the market indicating a ‘65% expectation of an rate of interest lower to 0.00% on the subsequent RBA Board assembly.’

With that mentioned, it stays to be seen if Governor Lowe and Co. will deploy extra unprecedented measures in 2021 because the “Board is ready to do extra if vital,” however key market tendencies might proceed to sway AUD/USD forward of the subsequent RBA assembly on February 2 because the central financial institution acknowledges that “the development in threat sentiment has additionally been related to a depreciation of the US greenback and an appreciation of the Australian greenback.”