Starting at the final paragraph of the statement, we note that RBA are satisfied that for the foreseeable future rates have hit a floor at 1.75. RBA have effectively said that the current rate could help sustain growth and return inflation to target. This is a bog statement to make when you consider they drastically reduced their own inflation forecasts, dragging inflation expectations and the Australian Dollar down with it.
The RBA’s recently revised inflation outlook has changed little to suggest they still expect trimmed mean inflation to dip as low as 0.7%. However, this had already been priced in to the decline form 78c, so if inflation doesn't dwindle at such a rate then it could be argued we could continue to see a supported Australian Dollar.
The Australian Dollar wasted no time in breaking above 74c as it took full advantage of a weaker greenback and lack of easing bias from RBA. Similar moves can be seen across the board, with GBPAUD on the cusp of breaking to multi-week lows and AUDNZD breaking way from the 1.050 lows.
Now that Lady Yellen has spoken there is not a great deal of 'red' news from the US, meaning many FX crosses can rely on domestic data to drive them. With sentiment on USD still bearish and bullish structures on AUD crosses staking shape, we could continue to see a stronger AUD as the week progresses.
Therefor AUDUSD remains in a buy-the-dip watchlist until conditions change.
RBA seem content with rates at 1.75%
Rates remained on hold as we expected but it was the statement that sent the Australian Dollar higher due to the rosy outlook on growth and removal of the easing bias.