AUD/USD Downside Limited To 0.60-0.62 In The Short Term
The Reserve Bank of Australia (RBA) has decided to maintain the cash rate at 4.1%. This decision was widely anticipated by market observers and came as a result of easing inflation pressures.
However, RBA Governor Michele Bullock indicated that there are signs of continued tightness in the job market.
During the press conference, Bullock stated that the decision to hold the cash rate was a consensus. When asked about the bank’s priorities between inflation or growth amid tariffs, Bullock emphasized that inflation is the "number one thing". This stance sets the RBA apart from the U.S. Federal Reserve.
Following the RBA’s decision, the Australian dollar (AUD) against the U.S. dollar (USD) experienced a slight increase, but it continues to lag within the G10 currencies.
The pricing of a May rate cut decreased by 1.1 basis points, aligning with the viewpoint of UBS that the RBA wasn’t adopting a dovish stance, but rather acknowledging the increasing global risks.
"With net-short positioning elevated and superannuation fund outflows slowing, we believe the downside is limited to 0.60-0.62 in the short term. We like to sell the pair’s downside and shift the AUD to Attractive from Neutral," UBS FX strategists said in a note.
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Source: Investing.com
