The Reserve Bank of Australia delivered no surprises along with no pushback against providing additional stimulus while the newly released government budget also suggests to economists at TD Securities that the RBA will need to add more support. They think AUD/USD rallies towards 0.72 should be faded.
“The RBA met overnight and reaffirmed our expectation that more monetary accommodation will come in November. The statement offered no pushback on pricing in further accommodation.”
“The Australian government released its budget overnight, and they do not project the unemployment rate to 6% until 22/23 (5.5% in 23/24). These forecasts are not consistent with the RBA inflation and unemployment targets over the coming years (i.e. need to get inflation below 5% to probably generate inflation), suggesting that RBA support will be forthcoming.”
“For AUD/USD, we think rallies towards 0.72 should be faded with an eye towards 0.70 as key support.”