Australia’s central bank left the interest rate unchanged at 3.25%, in a move that was somewhat surprising. The higher inflation rate reported recently supported a pause at the moment, but the global slowdown still raised expectations for a cut.
AUD/USD reacted with a leap, rising from around 70 pips, from 1.0365 to 1.0435 before stabilizing on high ground.
The statement noted some improvement in the global outlook, especially seeing a stabilization in China. So, there are already new doubts about a rate cut in the next meeting in early December.
AUD/USD is trading in a wide range of 1.0150 to 1.06 for quite a long time, and is now moving a bit higher. For more lines and events in this busy week, see the Aussie dollar forecast.
The elections in the US will definitely have a strong impact on the Aussie, which is a classic “risk currency”. Generally speaking, the Aussie would rise potentially rise on a Romney win and fall on a victory for Obama, even though a victory for Obama could already be priced in.