AUD: Interest rate decision

Saw the history of previous decision in August (+0.25%) - it does not worth to trade this. Does anybody have different opinion?

Last August rate increase was a puzzle.

Initially AUDUSD dropped by 20 pips before moving upward! If you straddled, you'd loose on the short and profit on the long side...

It is widely expected that there will be a raise... in such a case, perhaps, simply go with a straddle. AND should it whipsaw, BUY AUDUSD when it dipped down.

But should audusd stay down, then you'd get x2 losses.

ur call.

The central bank issues a statement to go with the decision so the direction of the currency depends more on the statement than the decision itself (unless they don't hike, in which case AUD would go down like crazy).

Be interesting if they didnt raise. There is about a 10% chance they will pause But if they do aud/usd loses 100pips. But if they do raise, i cant see aud/usd going up too much anyway.

Aha, I think we wont loose anything, if we put Sell Stop 25-30 pips below the actual price... Just on Luck!

I think the best way to trade this is to wait for the result and statement-then trade accordingly. The rate increase is already priced in-so the statement will determine which way the Aussie will go from here-of course, a suprise either way (no increase or a larger one) will have a very strong effect (bearish-bullish).

I will personally straddle one way with a sell stop 20 pip below market just in case we have a surprise.

hello shafii
how much sl and tp would you like to set for this and which pair will you tarde? thanks

Heads up!

http://z10.invisionfree.com/Historic...p?showtopic=51

When the market expected a raise, the pair did not move much.
But when the market did not expect a raise, it zooms like a dragsters.

What it means is, when it is expected, it is already priced in.

yeah its priced in for sure, the only trade i see here is to short AUDUSD, but i will wait for price action to tell me if this is a good trade.

We're talking about AUD/USD here for sure.
I will keep my TP open, I will close manually.
Remember it's only a one way straddle, keep the distance conservative -20pip from market.

I wouldn't look for a big move after the annoucement unless it is a surprise like has been stated. Even if it is only 6.25% the AUD will likely go higher over the next week in general. I like some of the crosses since this will make the AUD a bigger attraction for carry trades.

dont forget there is a "statement" that comes with this. the statement is similar to what bernanke and the fed put out, sometimes it is even longer. the statement is what will move the market, if it moves.

and here is the statement...


STATEMENT BY GLENN STEVENS, GOVERNOR
MONETARY POLICY

At its meeting yesterday, the Board decided to increase the cash rate by 25 basis points, to 6.25 per cent. The decision was taken against a background of continued expansion in the global economy and further evidence that inflationary pressures had increased.

The world economy has grown strongly in 2006 and is generally expected to grow at an above-average pace in 2007. Although growth in the United States has moderated recently, strong conditions are prevailing in other parts of the world. The global expansion has contributed to high levels of commodity prices, which continue to add to incomes and spending in Australia.

The Board took careful note of the likely economic effects of the drought, which will lower the supply of rural produce, reduce farm incomes and may temporarily affect prices for some foodstuffs. At this point, these developments appear unlikely to affect significantly the medium-term outlook for inflation.

Domestic demand has been expanding at a relatively strong pace against a background of limited spare capacity. Labour market conditions have remained tight and businesses are reporting high levels of capacity usage. While there have been some tentative signs of moderation in the demand for credit recently, the overall pace of credit growth has remained strong.

This combination of forces has contributed to an increase in inflation. In the September quarter the underlying inflation rate was around 3 per cent, up from 2½ per cent at the end of last year, and it is likely to remain around that rate in the near term. The headline CPI increase has been noticeably larger than this recently, though this reflects some temporary influences which will be reversed in the quarters ahead. Producer price indices showed further strong increases at all stages of production in the September quarter. Aggregate wages, though not accelerating further, have continued to grow at a faster‑than‑average pace.

The Board judged this to be an environment in which the risks of inflation exceeding 2-3 per cent over the medium term remained significant. Monetary policy has been responding to these risks for some time, with increases in interest rates in May and August. Some effect of those measures is becoming evident in demand for credit by households. Nonetheless, the Board’s judgement yesterday was that a somewhat more restrictive stance of monetary policy was required in order to moderate inflation over time, and thereby to secure sustainable growth.

good thing I stood aside..

its a double looser if you straddled.

6.25% (no trade), now it's time to go for a sleep... ZzzzzZzzz

No trade on this one, my sell stop wasn't hit.
That's the good thing about TTN, I cancelled my waiting stop as soon as I heard there was a rate increase

Interest rates announcement are not easy to trade and like a few have already said there need to be a surprise for any big moves.
The last big move I saw was when the BOE made a surprise hike a few months ago and GBP rose some 100 pips; it was one of the best gains I made on a rate announcement.

what about that last NZD statement, that was a wild ride that lasted a couple days!

yup.... tats wat i m goinaaaa dooo.