Earlier today in the Asian session, the Reserve Bank of Australia took the markets by surprise, as it decided to keep its key cash rate intact at the 3.85%, abstaining from a 25bps rate reduction with the committee opting for caution amidst uncertain trade conditions.
Even though policymakers noted that inflation has been trading within the bank’s target range for the past two quarters and scenarios for a severe global downturn eased in recent times, standing on the sidelines and observing the flow of incoming data but also the state of the global economy seems more appropriate currently.
The board’s vote split was 6 for pause and 3 for cut.
Governor Bullock noted at the press briefing that the fresh tariff escalations between US and China is another factor taken into consideration by the central bank, given Australia’s close trading ties with China, yet the head of the bank remains optimistic, foreseeing that the current Australian administration would deepen ties and boost trade, which could insulate the adverse effects of a US-China feud.
The Aussie rose on the back of the surprise halt, rebounding strongly and severing a three day decline, alongside 10 year yields which rose to the 4.3% , their highest level since June of 2025.
Technical Analysis
AUDUSD Chart – The Aussie finds support near 1-week lows after RBA’s surprise pause
Resistance: 0.6600 (R1), 0.6700 (R2), 0.6800 (R3)
Support: 0.6450 (S1), 0.6370 (S2), 0.6280 (S3)
