Intra-day Market Moving News and Views (AUS/USD)

Intra-day Market Moving News and Views
03 Nov 2015 07:00GMT

AUS/USD - ...... Aussie trades near Asian high of 0.7213 after RBAQ stood pat in its rate decision. Reuters reported earlier Australia's central bank kept its cash rate steady at a record low of 2.0 percent on Tuesday, but said subdued inflation meant there might be room for a further easing if needed to support the economy.

The Reserve Bank of Australia (RBA) disappointed some by not cutting straight away at its monthly policy meeting, though the shift to an explicit easing bias kept alive the prospect of a move at some stage.
In a brief statement, RBA Governor Glenn Stevens said the outlook for the economy had actually "firmed a little" in recent months with business conditions improving and employment stronger than expected.

"(Board) Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand," he added.
Debt markets seemed to suggest investors were not counting on the RBA cutting by year end. Interbank futures for December slid to imply around a 36 percent chance of an easing, from above 70 percent earlier in the day. A drop to 1.75 percent is fully priced in by April.

Since last easing in May, RBA officials have sounded reluctant to cut even further in part for fear of inflating a debt-driven bubble in home prices.

There have also been hopeful signs of a pick up in non-mining investment with business conditions, confidence and borrowing all improving.

Yet, speculation about a cut had mounted after Australia's major banks last month decided to lift mortgage rates in an effort to shield profits from rising regulatory costs.

A surprisingly low reading on price pressures out last week had added to the talk. Underlying inflation slowed to an annual 2.15 percent in the third quarter, near the floor of the RBA's long-term target band of 2 to 3 percent.

With the broader economy still weighed by falling mining investment and weak commodity prices, some analysts had argued an easing would be warranted in the next few months.