As anticipated, the RBA board left interest rates on hold at 2% this afternoon.
They have also repeated their statement from last month that the Aussie dollar has declined noticeably and “further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.”
But, Aussie dollar traders are taking the comment — having eased policy last month the RBA have again felt it appropriate to leave rates on hold this month — as slightly bullish.
The RBA retains what you might call a soft easing bias noting, “Information on economic and financial conditions to be received over the period ahead will inform the Board’s assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.”
For the moment the RBA is leaving the Aussie dollar’s future firmly in the hands of the US dollar. There is nothing wrong with that. The RBA has believed and stated, for some time that a Fed hike will be a game changer.
The RBA missed an opportunity to lean on the Aussie. But one day’s price action has never been its focus.