Sean Callow, analyst at Westpac, points out that AUD/USD was around 0.6885 heading into the RBA statement and while it chopped around a little on the initial headlines, 15 minutes later it was only a touch firmer at 0.6895, consistent with the lack of surprise in the release.
Key Quotes
“The statement observed that, “The Australian dollar is at the lower end of its range over recent times.” This is only slightly tweaked from October’s, “The Australian dollar is at its lowest level of recent times.” A$ TWI was 59.9 and AUD/USD 0.69 yesterday, compared to 59.2 and 0.6750 just ahead of the October meeting.”
“On the positive side for the Aussie, the tone of the statement hints at a strong preference for a policy pause into 2020, backed by the notion of a “gentle turning point” in economic growth, on track for 3% growth in 2021. But RBA Governor Lowe has been determined not to encourage any appreciation in the currency, so the retention of the phrase “prepared to ease monetary policy further if needed” should ensure low AU yields continue to keep a lid on A$ rallies.”
“The positive global risk mood should keep AUD/USD supported near term, with scope for a test of the 200 day moving average currently at 0.6953. But that is probably as far as we can expect the pair to reach, with Australia’s economic activity broadly sluggish and downside risks to key commodity prices in coming weeks.”
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