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RBA keeps rates unchanged, AUDUSD loses initial gains

Published September 5, 2018

Author: Dennis Li

The AUD/USD enjoyed an initial and somewhat brief rally above 0.7200 immediately after the RBA decision to keep rates on hold for the 25th consecutive month. It didn’t take long for the dominate concerns of trade wars, a decline in emerging markets particularly Argentina and South Africa, interest rate differentials and robust US economic data to override any positive statements from the RBA.

In its statement yesterday the RBA displayed no shift in tone maintaining the line that growth outlook remains at about 3%, inflation picking up slowly and with unemployment possibly reaching 5% by year’s end.

Keeping with the short lived theme, we also saw the AUDEUR touch its high of 0.6233 before tumbling back below 0.6200 overnight. Our GDP data released this morning at 11:30 Sydney time is expected to maintain the volatile tone.

  • The USD rose broadly over concerns about a possible escalation in the Sino-US trade disputes after the public comment period ends in Thursday.
  • US manufacturing activity jumped to a 14-year high in August boosted by a surge in new orders but recently imposed import tariffs could restrain further growth.
  • The growth of manufacturing activity in Canada eased for the second straight month as slower growth in new business offset the strongest expansion of production volumes in nearly 8 years.
  • The presidency of the EU has asked the bloc’s finance ministers and central bankers to discuss interest rate hikes in meetings to be held later this week in Vienna.