The most crucial part about Glenn Stevens’ speech today was what he didn’t say

Photo by Stanley Chou/Getty Images

The ANZ’s Australian economics team believes it was not what RBA governor Glenn Stevens’ said today, but rather what he didn’t, that led to the Australian dollar coming under renewed selling pressure, taking it to as low as .7185 against the US dollar.

The team, led by Felicity Emmett, explains:

For the AUD there were no large consequences from this Q&A. While the AUD did fall after the Q&A began, there was no smoking gun and it looks to us like the selling of AUD was driven by a bit of relief that the Governor was not seen to be overtly pushing against broader market expectations of further easing.

Coming into the event, Stevens would have been acutely aware that markets — be they economists, strategists, traders or investors — were pricing in a strong likelihood that the RBA would follow up its May rate cut with another, or perhaps more, in the months ahead.

On a quiet session in Asia, devoid of major economic releases or events, he was the headline act.

Stevens would have known that, and would have been equally aware that he had the perfect opportunity to correct current market pricing.

He didn’t.

That alone suggests that a further reduction in rates is likely.