FX.co ★ The Central Bank will be cautious in the current situation of uncertainty

The RBA left its key interest rate at the previous level of 1.5%, indicating that the strong Australian dollar is hampering economic growth and that inflation seems to remain at current levels for some time. He also stressed the general positive situation in the economy but also made it clear that households spend more than they earn.

Against the background of the meeting, the Australian dollar fell sharply against the US dollar but then won back some of the losses. A similar picture was noted in other currencies traded against it, with the exception of the euro.

Analyzing the decision of the RBA, it can be argued that the regulator will adhere to a restrained and cautious position in the monetary policy decision, which is likely to dominate the markets before the outcome of the meeting of the ECB and the Fed, the world's two most influential central banks. This position is caused not only by contradictory data of economic statistics that have recently come out, but also by the Fed's apparent inhibition in the cycle of further interest rate hikes. In this situation, none of the Central Bank will not, as they say, run ahead of the locomotive, at the risk of making a mistake. As a rule, in such a situation, regulators of economically developed countries pause in anticipation of new actions from the Fed or the ECB.

Recall that this Thursday will be a very significant meeting of the ECB, from which the markets are waiting for decisions on incentive programs. The decision of the regulator to stop supporting the euro-zone economy will be an important step and will support the euro, but if the bank does not report anything on this topic or limits itself to empty, meaningless comments, one can expect the euro to fall in global markets on the wave of investors' disappointment, as the idea of eliminating incentives is incorporated in the prices.

In addition to the RBA meeting, today published data on Switzerland's GDP for the second quarter, which turned out to be much worse than forecasts. The quarterly value of the indicator grew by only 0.3% against the forecast of 0.5% and the previous increase by 0.1%. In annual terms, the growth of the indicator fell to 0.3% from 0.6% against the expectation of a strong increase to 1.1%. Against this background, the franc slightly decreased, but its status as a refugee currency supports it.

Forecast of the day:

The EUR/USD pair is consolidating above the level of 1.1880. Today, it is likely that the pair will continue to consolidate in the range of 1.1870-1.1920 in anticipation of the outcome of the ECB meeting. If at the end of the meeting the bank does not give a clear signal about the decision to stop the stimulation, then the pair may fall to 1.1800 and then to 1.1685.

The pair USD/JPY is trading below the 109.45 mark on the wave of increased geopolitical risks from the confrontation between the US and the DPRK. Against this background, the pair may fall to 108.45.