Forex Flash: AUD makes a move following RBA statement – UBS

The Australian dollar saw a triple dose of upside overnight as the RBA kept the policy rate on hold – Australian retail sales surprised to the upside, and government spending in Q4 was very robust. According to Research Analyst Gareth Berry at UBS, “The latter creates upside risks for Wednesday's Q4 GDP report.” The RBA policy statement was largely identical to February's edition.

The explicit easing bias remains in place with the Board seeing scope to ease policy further, should that be necessary to support demand. “Our Australia economists do not think it will come to that though, and they stick to their view that no further easing will be needed.” Berry adds. The AUD/USD has now recovered fully from Monday's losses triggered by new measures to cool the Chinese property market.