Housing boom might keep RBA steady at tomorrow’s policy meeting

Tomorrow Reserve bank of Australia (RBA) will announce its monetary policy decisions at 4:30 GMT. As of now, RBA's benchmark lending rates remain at 2.25%.

• Traders would be closely monitoring RBA's decision to gauge further direction cues for Aussie. Aussie tested resistance area of 0.80 last week amid weaker dollar, however failed to break the bears.
• Tomorrow's policy hold might prompt Aussie to test resistance area once more and even break above, should the dollar weaken.

What are RBA's consideration for adjusting monetary policy?

• Domestic economy is showing signs of life as employment situation started improving. Jobless rates have dropped 6.10%.

• Global commodities are showing signs of stabilizing with crude oil up close to 25% from its lowest. Copper, Natural gas and other commodities all have bounced back.

• Australian housing sector, showing signs of overheating amid lower interest rates by RBA. Building permits grew 23.6% in March from a year ago. Bank's housing loan portfolio is growing rapidly.

• Survey from RBA, indicates that loans to business sector remains subdued.

• Data from China indicate that manufacturing slowed at fastest pace in at least 13 months with HSBC PMI falling to 48.9 for April.

Probability is high that RBA would hold rates over tomorrow's meet and move to wait and watch mode.

Aussie is trading at 0.783 against dollar. Speculative buy trade here with 80-100 pips stop might produce high return should RBA hold policy.