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Currencies AUD Aussie Dollar (AUD) To Move Higher On RBA Decision?

Tomorrow is the rate policy meeting decision Down Under and market expectations are for a possible 25 bp rate reduction.  However, inflation metrics have been moving higher and the Australian economy has been chugging along despite the problems in the Euro zone that could lead to a global recession.

Looking at the chart below, the Aussie (AUD) has been gaining steadily, especially after last week’s swap line reduction to try to provide liquidity to the global banking system.  Were it not for the Euro zone crisis, global appetite for risk would be much higher and the Aussie would stand to benefit.

The RBA has been known to take a wait and see approach to rate-setting so perhaps this will be a time when they may do the same.   There is good support for the AUD/USD pair at 1.0230 so a non-action by the RBA makes for a good trade that could produce a 2:1 reward/risk.

Therefore, the target for the Aussie is at 1.0425, using a stop just below support at 1.0230.