RBA is on track to ease more cautiously than the Fed – BBH

FXStreet Insights Team FXStreet

AUD/USD dropped back to the lower end of its 0.6580-0.6630 range which has been in place since September 30, BBH FX analysts report.

AUD/USD can edge higher in the short term

"Australia’s Westpac-Melbourne Institute Consumer Sentiment Index fell -3.5% m/m in October to a six-month low at 92.1 driven by more downbeat views on the near-term outlook, especially prospects for family finances. Encouragingly, consumers are still not concerned about the outlook for jobs as the Unemployment Expectations Index declined -2.9% to a two-month low at 127.6 in October."

At its last September 30 meeting, the RBA left the policy rate at 3.60% and signaled that the bar for additional rate cuts is high. The next RBA meeting is November 4 and cash rate futures imply 40% odds of a 25bps cut. Over the next 12 months, cash rate futures continue to more than fully price-in one 25bps cut and the policy rate to bottom around 3.35%."

"Bottom line: AUD/USD can edge higher as the RBA is on track to ease more cautiously than the Fed and global economic activity is resilient."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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