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Forex Flash: No reason for a AUD selloff on the RBA decision - Commerzbank

Commerzbank analysts consider the RBA statement to be relatively balanced: "It is becoming clear that the RBA will take a wait and see attitude as far as domestic demand is concerned before taking further steps. After all it left the key rate unchanged at 3.0% which corresponds to our expectations", wrote analyst Antje Praefcke, adding that the stamente pointed out that the global outlook has improved, a fact that other central banks have also referred to recently, and there are only moderate changed to the domestic economy part.

As growth is slightly below the trend (but past rate cuts are beginning to show some of the expected effects) and inflation remains low, it very much looks as if the RBA wasn’t done yet with its current rate cut cycle but as if it prefers to wait for further data releases before changing rates again. "Easier conditions would in turn make things easier for areas outside the mining sector to fill the gap left by the end of the investment boom in the mining sector", he wrote.

"The RBA is clearly hoping for a soft transition in a divided economy: slowly ending investment boom in the mining sector with a simultaneous recovery in other sectors (e.g. manufacturing sector and others) thanks to lower rates", continued the Commerzbank analyst, attentive to what is coming next, but with no reason to sell the AUD massively as a result of the rate decision. "We think 1.0350-80 should hold in AUD-USD", he concluded.

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