The Aussie dollar is trading above 71 cents after the RBA Governor’s incredibly short statement on interest rates this afternoon.
While virtually no one was forecasting a rate cut as a result of this morning’s RBA Board meeting the Aussie dollar has popped almost 40 points higher as a result of the decision to leave rates on hold.
Given how tight the hourly ranges have been over the past few weeks that could suggest short-term traders were betting on the chance that the RBA might cut, or more likely were betting that the RBA would be dovish.
That would be a reasonable assumption given that the Fed passed on raising rates because of concerns about conditions abroad and that this reference was largely read as concern over the growth profile of China and emerging markets.
But the text of the governor’s statement gave no hints as to near-term policy and with the improved technical outlook the buyers have taken the Australian dollar higher.
The only reference in the governor’s statement to the Australian dollar was a curt, “the Australian dollar is adjusting to the significant declines in key commodity prices.”
There was no reference to the need for a lower Aussie and the message that rates are still appropriate at 2% suggests no rush to ease further. And, no reason for a market short Aussie to sell.
So the has Aussie rallied.
Here’s the chart.