No room for surprises from the RBA – UOB

Researchers at UOB Group assessed the recent ‘on hold’ stance from the RBA at its meeting earlier today and gave their views on the Aussie Dollar.

Key Quotes

“Today’s RBA’s decision was clearly a non-event. This is the reason why AUD remains muted following the announcement”.

“We maintain the view that the RBA is in no hurry to move rates especially with wages and inflation remaining low. Perhaps a key turning point was 31 January – when 4Q inflation data showed both headline and core inflation staying below the bottom of the RBA’s 2-3% target”.

“RBA Governor Philip Lowe’s mid-February testimony to lawmakers also made it clear he was in no hurry to tighten”.

“With regards to our short-term view on AUD/USD, as highlighted in recent FX Insight updates, another attempt to break 0.7730 on a ‘sustained basis’ is not ruled out but based on the rapidly waning momentum, the odds for such a move are not high. However, only a break above the key resistance at 0.7820 (level unchanged) would indicate that the current mild downward pressure has eased.