Bank of America Global Research discusses its reaction to tonight's RBA policy meeting.
"We expect the RBA to stick to its gradual 25bp hiking pace and raise the cash rate by 25bp on 1 November...Stronger-than-expected 3Q CPI means a 50bp hike cannot be ruled out. But the RBA remains focused on downside risks to growth," BofA notes.
"The sensitivity of AUD FX to RBA surprises has been muted in the past several months - something observed for other currencies too - likely related to concerns that aggressive rate hikes amplify recession risks. To this extent, the RBA may be a secondary factor relative to global risk sentiment, China and the broader USD trend. All these factors continue to weigh on AUD/USD although we have flagged the relative resilience of AUD in trade-weighted terms," BofA adds.
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