OCBC analysts see AUD supported by carry trade appeal and China stimulus prospects despite RBA pausing rate hikes.
The Reserve Bank of Australia left its cash rate unchanged at 4.35% in a unanimous 9-0 vote but maintained a modest tightening bias. The decision followed active consideration of a rate hike during the August meeting, contrasting with June’s more neutral stance.
Markets interpreted the policy statement and updated forecasts as less hawkish than feared, though Governor Bullock’s press conference introduced mixed signals. Inflation remains sticky, leaving the door open for another rate increase despite expectations the RBA is near its peak tightening cycle.
Analysts remain constructive on the Australian Dollar over the next one to two quarters, citing attractive carry trade opportunities and potential Chinese policy stimulus. However, gains may moderate as growth slows and inflation trends toward the target, prompting a gradual shift away from restrictive policy.