The RBA stands pat on monetary policy this morning. Optimism from the RBA Statement provided Aussie Dollar support. Next up, the Budget.
The RBA once more left interest rates unchanged this morning, which had been widely anticipated by the broader market. In the October meeting, the Board decided to leave the targets for the cash rate and the yield on 3-year government bonds at 25 basis points. After last month’s expansion to the Term Funding Facility, there were also no further changes this morning.
From the RBA Rate Statement this morning, salient points included:
In response to the RBA decision and comments within the rate statement, the Aussie Dollar rose from $0.71886 to $0.72087 before easing back.
At the time of writing, the Aussie Dollar was up by 0.11% to $0.71867.
The RBA continues to see the containment of the coronavirus as the key to economic recovery.
The last outbreak in Victoria and rising cases in some geographies continue to pose a threat to the ongoing recovery.
Consumers and businesses will need to remain confident that the government is taking the appropriate measures to prevent another lockdown.
For the Aussie Dollar, we continue to see consumer confidence and employment conditions as key.
The positive view on employment conditions was certainly a boost for the Aussie Dollar this morning.
A faster than expected recovery in labor market conditions should translate into better than expected consumption figures. This should then fuel a more rapid economic recovery and provide price stability.
Next week, employment numbers for September will therefore be critical. A positive set of numbers should fuel further upside for the Aussie Dollar.
As highlighted by the RBA, the 2020 federal budget should also support the economic recovery. The government will announce the budget later today.
There will be plenty of focus on the government’s steps to restore confidence and support an economic recovery.
Tax cuts are amongst the anticipated moves to drag the economy out of a recession.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.