Chart of the day: AUDUSD (06.08.2024)

The most important event of the day in APAC markets was the RBA's decision on interest rates. As expected, the Bank of Australia kept rates unchanged at 4.35%. The bank reiterated its comment on the persistence of inflation and added that all options within the bank's causal mandate are on the table at a future Council meeting. 

At a post-decision press conference, Governor Michele Bullock said there are still risks that it will take longer than previously expected for inflation to return to target, and that it is too early to talk about an imminent easing of monetary policy. "The market path at the moment is pricing in interest rate cuts by the end of this year," she - the governor said. "The board believes that in the near term, by the end of this year, given what the board knows at the moment and given where the projections are - that's not consistent with their thinking on interest rate cuts." Source: Bloomberg Financial LP

In response to these comments, the swap market significantly reduced the chance of rate cuts this year. Even before the decision, the money market had assumed that we would see close to two cuts of 25 basis points each this year. At this point, the market is giving only an 80% chance of one such move. 

AUD was still leading the gains in the broad FX market until 11:00 am. Now, however, most of the gains have been erased and it is the dollar that has taken over as the leader of the intraday gains. 

Source: xStation