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All Eyes On RBA Decision Today

Published October 1, 2019

By Perry Mitchell

As noted yesterday the Aussie closed the last week virtually unchanged and continues to have a difficult time setting its next short-term direction. Nevertheless, the broad-based USD strength on Monday saw the US Dollar Index climb to fresh multi-year highs above 99.40. This seemed to weigh modestly on the Aussie which was last down ~0.18% on the day, finding support around 0.6750 this morning.

Data released out of China yesterday showed that the service sector lost momentum in September but the economic activity in the manufacturing sector contracted at a softer pace than expected. Note that China’s manufacturing PMI was stronger than expected in September but remained in contraction for the fifth straight month. Whether the bounce in PMIs can be sustained will in part depend on trade talks next week, although given the plethora of issues to be resolved, I would not be holding my breath for a comprehensive deal.

More importantly, the RBA will kick off Q4 with its October interest rate decision this afternoon at 2:30 pm AEST. The previous RBA monetary policy statement noted that “it is reasonable to expect that an extended period of low-interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target.”

There was a sharp uptick in RBA rate cut expectations about two weeks ago in response to uninspiring employment data, which detailed an uptick in the unemployment rate to 5.3% despite a rosier reading on the headline change in employment figure. Markets are currently pricing in a near 80% of another 25-basis point cut today, although, a dovish outlook in the policy statement could put the AUD under renewed selling pressure.




Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020.

Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020.

Any queries regarding the Administrations should be directed to