Chart of The Day – AUD/USD
- The Reserve Bank of Australia (RBA) kept the cash rate at 3.85 %, defying consensus expectations for a 25 bp cut and signalling it will reassess policy after the 30 July quarterly CPI.
- Governor Michele Bullock defended the Bank’s “cautious, gradual” approach, arguing its communication is ample and that the only debate on the Board is timing, not direction, of easing.
- AUDUSD popped toward 0.6550 on the decision, but bulls hesitated as traders recognised the move is a delay, not a cancellation, of the easing cycle; the pair remains dependent on forthcoming inflation data and global risk sentiment.
The council voted 6–3 to keep interest rates unchanged, explaining that with slowing inflation and the earlier 50 bp cuts, it is reasonable to pause and wait for more data. Policymakers emphasized that inflation risks are now “more balanced,” the labor market remains tight, but global trade uncertainty calls for patience.
At the post-meeting press conference, Governor Bullock rejected claims of unclear RBA messaging. She asserted that the Bank provides “sufficient information,” and any confusion stems from market misinterpretations rather than a lack of communication. She downplayed the earlier discussion of a possible larger 50-basis-point cut considered in May, calling it an “alternative” that was quickly dismissed. She stressed that the current pause simply allows time to confirm the inflation trend. She also noted that monthly CPI readings are volatile, and the quarterly July print will be decisive for the August decision.
The Australian dollar initially strengthened as investors closed short positions after the surprise decision, but the rally stalled below technical resistance near 0.6550 and the upper bound of the daily range. So far, price action suggests the market views today’s decision as a tactical pause rather than a strategic shift.
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