AUD/USD: RBA only to make a policy move above 0.75 – ANZ

Economists at ANZ Bank have looked into the impact that past changes in the RBA’s commentary around the aussie had on the currency and have found that the inclusion of the exchange rate in the statement generates some weakness in the AUD though it is short-lived when it is not accompanied by an actual shift in policy. 

Key quotes

“In half the cases we looked at, the AUD fell by between 0.5-1% on the day that negative rhetoric on the AUD appeared in a statement. In four of the six instances, those losses persisted into the two-to ten-day window; but the gains from being short were not substantial enough to be classed as a trend shift, instead it looks like a tactical trading opportunity. Of all the crosses, the AUD/USD provided the most reliable and strongest trend to trade. There was no evidence that a ‘buy the dip’ strategy would work, even when the trend ahead of the RBA was higher.” 

 “We do not think any potential shift in tone from the RBA will prove critical to the direction of the AUD, unless it is followed up by policy action. This would need the AUD/USD to be trading above 0.75 for a sustained period and absent an improvement in its fundamental drivers, like the terms of trade. And that scenario is a long way off, for now. So we would treat any near-term shift in the RBA’s tone as tactical in nature, rather than a signal of a trend shift for the AUD.”