The Reserve Bank of Australia (RBA) is likely to initiate monetary policy normalization on Tuesday. The Australian dollar could benefit from the decision, economists at Commerzbank report.

The market is expecting a rate hike from 0.10% to 0.25% 

“The market is expecting a rate hike from 0.10% to 0.25%. For the AUD to be able to benefit from the RBA’s rate decision the RBA would probably have to send out additional hawkish signals. That seems realistic though in view of recent inflation developments.”

“Rate expectations on the market have already gone a long way and it is likely to become difficult to top these expectations. Additionally, the outlook for China's economy is becoming increasingly gloomy in view of the ongoing lockdowns there.”

“After AUD/USD eased notably over the past days the RBA rate decision might nonetheless be able to support AUD to some extent as long as the general market environment allows for that.”