- RBA kept rates unchanged at 0.75% as expected.
- The central bank said a gentle turning point appears to have been reached.
- Markets may continue to price out prospects of a year-end rate cut, helping the AUD pick up a bid in Europe.
AUD/USD is seeing little action in response to the Reserve Bank of Australia's (RBA) decision to maintain the status quo on interest rates.
The RBA kept its target overnight cash rate (OCR) at the current level of 0.75% following 25-basis point rate cuts at the June, July and October RBA meetings. The central bank was expected to stand pat on rates.
The central bank said that the central scenario is for inflation to pick up gradually and growth is likely to pick up up to around 3% in 2021. Wage growth, however, is likely to remain around the current rate for some time, the bank added while stating that a gentle turning point appears to have been reached, signaling scope for a pause in the easing cycle.
The market was expecting the RBA to water down its easing bias and acknowledge the improved mood in the financial markets and economy.
The AUD, therefore, continues to trade in a flat-to-negative manner around 0.6680, a level seen ahead of the RBA's rate decision. With RBA's watered-down easing bias, markets may continue to price out the prospects of the RBA cutting rates into the year-end. Currently, the probability of the year-end move stands at 24%.
The AUD, therefore, could pick up a bid during the day ahead, more so, if the equities and other risky assets continue to cheer the US-China trade optimism.
Technical levels
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