The AUD is in a steady decline following today’s interest rate announcement, with the RBA keeping rates on hold at 1.5%.
Prior to the announcement at 2:30pm AEST, the AUD was trading at US76.8 cents after pushing above US77 cents at the end of last week.
Since then, the Aussie has fallen significantly against all major currencies, a short time ago pushing towards the US76 cent level.
While analysts fully expected rates to stay on hold, the RBA’s accompanying announcement clearly struck a more dovish tone as far as currency markets were concerned.
The RBA’s statement was little changed from the previous month, with the bank maintaining a similar view on the economic outlook, strength in the labour market and wage growth.
It suggests that some of the recent support for the AUD was driven in part by the expectations that the RBA would follow other major central banks and shift to a more hawkish outlook.
Last week, moves on the currency markets were strongly influenced by statements from the central banks of Europe, the UK and Canada. To varying degrees, all three banks indicated that a reversal of previous policy easing is now being considered.
While members of the European Central Bank moved to temper expectations around stimulus withdrawal to start this week, markets were clearly open to the prospect that the RBA would adopt a more optimistic outlook today in line with its global counterparts.
That hasn’t happened, and the AUD continues to push lower against the major currencies in afternoon trade.
The worst performing pair for the Aussie is AUD/JPY, which is now down more than 1% as the yen is finding strong support across the board: