AUD rises as RBA holds at 3.60% – BBH

Australian Dollar (AUD) is outperforming peers after the RBA left rates unchanged at 3.60% and signaled a high bar for further cuts, with futures trimming near-term easing bets, BBH FX analysts report.

RBA signals cautious approach to easing

"AUD outperforms most major currencies. RBA stood pat and signaled that the bar for additional rate cuts is high. As was widely expected the RBA left the policy rate at 3.60%. The decision was unanimous."

"The RBA noted that 'With signs that private demand is recovering, indications that inflation may be persistent in some areas and labour market conditions overall remaining stable, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting'."

"The next RBA meeting is November 4 and cash rate futures trimmed bets of a 25bps cut to 38% vs. 48% before today’s policy decision. Over the next 12 months, cash rate futures continue to more than fully price-in one 25bps cut and rates 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."