Australian Dollar: Constructive carry outlook with RBA on hold – OCBC
OCBC’s Sim Moh Siong and Christopher Wong note the Reserve Bank of Australia (RBA) kept rates unchanged at 4.35% but retained a modest tightening bias, with the Board having actively considered a hike.
The Reserve Bank of Australia (RBA) maintained its policy rate at 4.35% during its latest meeting, keeping a cautious approach with a slight bias towards tightening. While the monetary authority did not raise rates, its decision-makers had actively contemplated a hike. OCBC analysts Sim Moh Siong and Christopher Wong foresee a constructive outlook for the Australian Dollar (AUD) over the next one to two quarters, driven by favorable carry and potential Chinese policy support.
They anticipate more measured gains as economic growth and inflation moderate, suggesting the RBA may be nearing the peak of its tightening cycle. However, sticky inflation could still trigger a further rate hike. Analysts note that the RBA is likely to gradually ease its restrictive stance over the medium term. Meanwhile, the USD/JPY pair tested the August monthly low amid hawkish speculation and potential intervention supporting the Japanese Yen, while the US Dollar consolidated previous losses amidst soft bond yields.
Gold slipped below $4,500, while Bitcoin strengthened above $80,000. The US Nonfarm Payrolls report, set to release later on Friday, will shed light on the Federal Reserve's policy direction, potentially averting a September rate hike.
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