AUD/USD to remain capped around the 0.72 neighborhood – Westpac
|The Reserve Bank of Australia (RBA) board members decided to leave its official cash rate (OCR) unchanged at a record low of 0.25% when it met at its October monetary policy review meeting this Tuesday. The AUD/USD pair briefly regained the 0.7200 mark but the more dovish tone than September capped the move, per Westpac.
See – Breaking: RBA leaves OCR unchanged at 0.25%, AUD/USD regains 0.7200
Key quotes
“The RBA policy statement did see a modest jump in the AUD/USD pair given no change in policy and no obvious sign that a rate cut is set for the November meeting. However, the fact that the last line from the August minutes that the RBA would ‘continue to consider how further monetary measures could support the recovery’ did make it into the statement essentially capped the move.”
“The RBA did note that any additional easing would be focussed on supporting jobs, but that ‘unemployment rate is likely to peak at a lower rate than earlier expected’ and that ‘the Bank will publish a full set of updated forecasts next month’ further complicated the policy outlook.”
“On the currency, the RBA simply noted that ‘the Australian dollar remains just a little below its peak of the past couple of years’ rather than the guidance offered in the Sep minutes that a ‘lower exchange rate would provide more assistance to the Australian economy in its recovery’.”
“We remain of the view that the aussie should remain capped by 0.7190/0.7210 near-term given the Federal Budget later today, however, President Trump's health and the potential for US fiscal support remain significant drivers and positive news here could certainly lift the currency later.”
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