The Australian dollar just dived on rates clarification from the RBA

Photo: Romina Amato/ Red Bull via Getty.

The Aussie dollar just fell back below US79 cents following deputy RBA governor Guy Debelle’s speech in Adelaide.

Here’s the chart showing today’s fall. A short time ago the Aussie was down almost 1% in Asian trade:

After pushing towards US80 cents this week following the release of the RBA minutes from its July meeting on Tuesday, the AUD started today’s session at around US79.5 cents.

It subsequently dipped at 12:40pm upon the release Debelle’s speech, where Debelle said that the market on Tuesday had placed too much significance on the RBA’s discussion of a neutral interest rate in the minutes from its July meeting.

Debelle said:

“There was a discussion of the neutral rate at the most recent Board meeting, as detailed in the minutes of the meeting released earlier this week. No significance should be read into the fact the neutral rate was discussed at this particular meeting. Most meetings, the Board allocates some time to discussing a policy-relevant issue in more detail, and on this occasion it was the neutral rate.”

There was also a notable bond rally after Debelle’s speech. Yields on the benchmark Australian 10-year notes fell by around 6 basis points, and are back below 2.7%:

There were even steeper moves in shorter-term bonds, with 2-year Australian government bond yields falling by around 9 basis points to 1.84%:

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