Snapshot: The Aussie has slumped to around 0.7050 after the RBA held its cash rate steady at 4.35%, pausing after three consecutive rate hikes earlier this year. While Governor Bullock warned that inflation remains too high and further hikes are not off the table, the central bank’s shift to a wait-and-see stance has triggered a sharp unwinding of long positions.
- The RBA’s rate hold at 4.35% confirms that consecutive rate hikes are beginning to filter through the domestic economy, dampening the central bank’s hawkishness despite their formal tightening bias.
- A dismal Chinese economic print showing retail sales posting their first drop in over three years heavily weighs on the proxy-AUD, neutralizing any broader risk-on sentiment in the European cash session.
Bias into NY: We maintain a structural bearish bias into the New York session, looking to sell rallies targeting the 0.7000 support level; the domestic policy pivot and weak Chinese data should easily overpower yesterday’s 0.51% decline in the broad USD index ahead of the 08:30 ET macro prints.