Matt Simpson, CFTe, MSTA
CityIndex
The RBA surprised the markets by keeping rates on hold today at the historic lows of 2.25%.
Closing paragraph
"At today’s meeting the Board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will further assess the case for such action at forthcoming meetings."
The move suggests RBA are not in panic mode and want to see how the initial rate cut plays out, whilst also not wanting to inflame the property market.
Whilst this does not rule out another rate cut it still does not provide much information regarding of any cut in future. "Further easing may be appropropriate" clearly puts the emphasis on another cut, which is likely to be assessed on a month-by-month basis.
Focus will now shift over to Australian GDP, Yellen speaking and US Nonfarm Payroll on Friday.
AUDUSD spiked above Friday's high almost immediately and now appears to have confirmed a Bullish Wedge within the sideways range. Near-term momentum is likely to remain bullish going into UK open.
The AUS200 nearly gave 6000 a high-five before RBA pulled the carpet from beneath it to see stocks tumble following the cash rate decision.
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