Australian Dollar Ignores RBA with US Policy Bets in Focus

Talking Points:

• RBA Keeps Headline Official Cash Rate Unchanged at 2.5%
• Australian Dollar Relatively Unchanged After Announcement
• Focus Now Shifting to GDP Figures Tomorrow at 1:30 GMT

The Australian Dollar was largely unresponsive after the Reserve Bank of Australia announced that it kept the official cash rate unchanged at 2.50 percent, as expected. The Bank also kept its forward-looking guidance for monetary policy at status quo, with Governor Glenn Stevens again calling for a “period of stability in interest rates.” Speaking about the exchange rate, Stevens said the Aussie was overpriced compared to most estimates of its fundamental value.

AUDUSD was down on the session as the US Dollar staged a broad advance and rose to a seven-month high. According to DailyFX Currency Strategist Ilya Spivak, the greenback’s rally reflected upbeat Fed policy bets ahead of this week’s key US news-flow. The in-line announcement by the RBA was unable to meaningfully disrupt this dynamic. From here, traders will be looking ahead to tomorrow’s release of second-quarter GDP figures by the Australian Bureau of Statistics, which might stir volatility if the outcome deviates from expectations.

AUDUSD [15mins – 09/02/14]. Chart created using FXCM Marketscope.