Some takeaways from the RBA today
The Australian central bank left its cash rate unchanged as expected but there were some interesting points to take note of, even though they may not be too material.
AUD/USD is little changed on the decision, still keeping around 0.7120-30 levels with the aussie not having much to work with in the immediate aftermath but there are little positive vibes here and there despite the resumption of bond buying.
Economic outlook
They revised their view on the domestic situation by moving slightly away from the narrative that the economic downturn is not as dire as anticipated, making mention to the "likely uneven and bumpy" recovery in Victoria due to the virus resurgence.
Though they did note that a recovery is now underway in "most parts of Australia".
They also kept a more reserved tone on the global outlook while maintaining that fiscal and monetary support will be required for some time.
However, an interesting point to note is that they talked up some scenario analysis/forecast ahead of their SoMP release on 7 August. More interestingly, they also considered a "stronger recovery" scenario if progress is made in containing the virus.
That is somewhat of a optimistic outlook but again, forecasts at this time are foolhardy.
Bond buying resumes
Among the lines that stood out in the statement in this one here:
The yield on 3-year Australian Government Securities (AGS) has been consistent with the target of around 25 basis points. The yield has, however, been a little higher than 25 basis points over recent weeks. Given this, tomorrow the Bank will purchase AGS in the secondary market to ensure that the yield on 3-year bonds remains consistent with the target. Further purchases will be undertaken as necessary.
The RBA is just offering a reminder to the market that they are still around and will do what is necessary to maintain yield curve control via QE. It isn't a change of policy but it just reaffirms that they will step in as and when is necessary to get the job done.
Nothing on the AUD
Once again, the RBA made no mention about the specific levels in the Australian dollar and buyers can take comfort in that. The last we got on this was from RBA governor Lowe's speech at the end of last month here.
And that seems to be the status quo even with AUD/USD keeping close to 0.72 as of late.
