AUD: New RBA governor fails to surprise
The Reserve Bank of Australia kept rates on hold as Michele Bullock made her debut as Governor. There was an overall sense of continuity from the previous governor’s policy stance, with the Bank’s view on inflation still rather benign and reinforcing the consensus view that the tightening cycle is over.
The usual caveat that further tightening was also widely expected essentially reiterates that the RBA retains the data-dependent approach that has driven policy decisions of late. Markets are pricing in around 10bp of tightening by December. We are more hawkish than the general consensus, seeing non-negligible chances that a CPI surprise will force one last hike to the peak.
Ultimately, even another hike would not be a game changer for the Aussie dollar. The sharp rise in US yields and soft risk environment should keep AUD/USD under pressure for now. Risks are now that the correction extends to 0.62/0.6250
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