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Australian Dollar: Beware a Bigger-than-Expected Interest Rate Hike
The Reserve Bank of Australia (RBA) is widely anticipated to raise interest rates by 25 basis points on Tuesday, a decision that, on balance, is unlikely to spark fireworks in the Australian Dollar. But what if the RBA goes bigger, or smaller than what is expected? Such a surprise would tend to trigger volatility in the Australian Dollar and according to analysts at BMO Capital Markets, there is a 35% chance of such an outcome. "We think there is a chance that the RBA surprises with a rate hike bigger than 25bps. We also think there is a small chance that the RBA surprises with only a 15bp rate hike," says Stephen ... (full story)