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AUD/USD and NZD/USD Fundamental Daily Forecast – RBA Should Delay Tapering Due to COVID-Related Risks

By:
James Hyerczyk
Published: Sep 7, 2021, 04:21 UTC

If the RBA sticks to its plans to taper bond purchases, the Aussie could temporarily jump higher.

AUD/USD and NZD/USD

In this article:

The Australian and New Zealand Dollars are edging higher on Tuesday as traders await key monetary policy decisions by the Reserve Bank of Australia (RBA) at 04:30 GMT.

Analysts remain divided on whether the RBA will call time on its stimulus plans.

National Australia Bank (NAB) predicts the central bank will reduce asset purchases again, “although the optics of tapering amid protracted lockdowns means it is likely to be a close decision,” NAB analyst Tapas Strickland wrote in a report.

At 04:00 GMT, the AUD/USD is trading .7440, up 0.0003 or +0.04% and the NZD/USD is at .7136, up 0.0001 or +0.01%.

RBA to Stick with Tapering Plans, or Maybe Not

According to Reuters, analysts are split on whether the RBA will delay tapering plans at its September policy meeting as a faster roll out of coronavirus vaccines offsets a harder-than-expected economic blow from lockdowns.

Some 36 of 37 analysts polled by Reuters expect the cash rate to stay at 0.1%, where it has been since a cut last November. This is no surprise given the RBA still argues a hike is unlikely until 2024 when it hopes wage growth and inflation will have finally picked up to desired levels.

More uncertain is whether it will delay a taper of its A$5 billion in weekly bond buying, part of a package of stimulus measures enacted last year as the economy was emerging from a pandemic-driven recession.

The bank surprised in August by sticking with plans to cut its bond buying to A$4 billion a week starting this month. Since then, the spread of the Delta variant has shut more cities and is set to cause a vicious contraction this quarter.

Yet of the 25 analysts that responded, 15 said the bank would not delay the taper and only 10 that it would.

Fewer wanted to comment on whether the RBA should delay, but of those that answered five said they should pause and 10 that they should go ahead and taper.

Daily Forecast

Look for the RBA to leave the cash rate at 0.1%. I also believe it will delay tapering plans as the economy struggles with the fallout of lockdowns in various states.

If the RBA sticks to its plans to taper bond purchases, the Aussie could temporarily jump higher.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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