Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Risk Event for the week starting 4 September: RBA rate decision

The Reserve Bank of Australia is expected to keep rates on hold at its next meeting.

Video poster image

Given this, and the more hawkish European Central Bank, Zain Vawda, FX analyst at Daily FX, looks at a potential deeper retracement for EUR/AUD from which to go long going into the rate announcement.

(Video Transcript)

The Reserve Bank of Australia

Let's take a look at the risk event for the week, starting Monday the 4th of September. And for this, we're joined by Zain Vawda, who's joined us now from Johannesburg, New Zealand. Zain, what have you got for us? Let us know more about the trade you're looking at. Hi, Jeremy. Thank you for having me, sir. The risk event I will be focused on in the week ahead will be the Reserve Bank of Australia interest rate decision with a potential long position on the EUR/AUD.

Now, obviously, looking at the Reserve Bank of Australia interest (RBA)'s position heading into the meeting, and we have obviously seen significant progress on the inflation front with the recent inflation trend coming in below the 5% mark for the first time since the highs of December 2022. Now, obviously, that coupled with a slight increase in unemployment, as well as the current situation in China, I do expect the RBA to keep rates on hold at the upcoming meeting.

The European Central Bank

Now, in contrast, if we look at the European Central Bank (ECB)'s position, yesterday we did have ECB and Euro area inflation data. And obviously, we saw a slight uptick there in terms of the headlining figure, as well as the month-on-month figure, even though we saw a slight drop-off in the core inflation number. Now, that also, we did hear some comments from ECB members who do feel that they are approaching the peak rate. However, they're not here yet.

EUR/AUD

So, I do think that we still will get at least one more rate hike from the ECB before the year is out. And obviously, looking at that picture on the macro side, I do think that there is still potential upside for EUR/AUD looking ahead. So, I mean, if we can take a look quickly at the chart and see what the technicals are telling us. I mean, if we look at the technicals here, we can see that we have been, you know, staircasing our way higher since the lows of August 2022, and, you know, making higher highs and higher lows up until two weeks ago when we reached the year-to-date high around the 170-60 mark.

RBA rate decision

Now, obviously, since then, we are seeing a slight replacement here, which is something I actually prefer. I am looking for a bit of a deeper replacement next week ahead of that RBA decision, and potentially looking at that 50% Fib replacement level, or potentially a bounce off that ascending trend line again, which would obviously provide the best risk-to-reward opportunity for potential longs.

Now, obviously, having said that, like I say, I do think this is a really interesting opportunity. I would be looking for fresh highs in weeks, and obviously, this is what I will be focused on in the week ahead. Sam, thanks very much indeed. That's Risk Advice for the week, starting Monday, the 4th of September.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.