The Australian Dollar enjoyed a day of mixed fortunes, oscillating between lows of 0.7160 and highs of 0.7230. The event of the day was, of course, the RBA announcement which as predicted, kept rates on hold. The statement was decidedly neutral in tone, and the lack of any further dovish sentiment sent the Aussie higher against the Greenback. The positive movement for the Aussie quickly shifted however as market sentiment reversed globally. Changing hands this morning at 0.7179, the Aussie again succumbs to off-shore forces abroad.
Kicking things off at home, the RBA extended its record run of policy inaction, holding rates steady at 1.5% as widely expected. The focus, however, was firmly on the accompanying statement for clues on the direction of the central banks thinking. The statement itself was broadly neutral in tone and notably did not mention Westpac’s decision to lift variable mortgage rates, basically shrugging off market concerns of rising rates. The statement also failed to mention emerging market turmoil and a laundry list of recent market concerns. The news sent the Aussie marginally higher although this quickly unwound as the day progressed.
The catalyst for the move downwards seems to have no crucial trigger with merely broad USD strength, and portfolio flows driving the market. The USD was heavily bought across the day as market participants in the US came back to work which saw the Greenback rise against most currencies, including the Aussie. Adding fuel to the fire, however, is the skittish demand for commodity currencies and emerging markets as Trump moves ahead with his additional $200bn tariff on China. Moving into Wednesday, the Aussie turns towards its Q/Q GDP figures for direction on the domestic front. Again, a key focus will be on off-shore headlines as well.