RBA leaves rates unchanged at 1.5%, higher AUD would slow economy and inflation

In today's Reserve Bank of Australia's (RBA) monetary policy decision, as widely expected, the Central Bank decided to keep its interest rate on hold at a record low of 1.5%, with the policy statement being interpreted as neutral. 

Statement by Glenn Stevens, Governor: Monetary Policy Decision

Rising AUD would slow the economy and inflation.

Expects Australia's terms of trade to decline but remain at high levels.

Outlook for household consumption a source of uncertainty.

Forecast remains for inflation to pick up gradually.

Sees signs of easing in Sydney house prices.

Stronger labor market should mean some lift in wage growth over time.

Labor market continues to strengthen, forward looking indicators point to solid growth ahead.

Key notes

AUD/USD risk reversals hit 3-month high

The technical recovery in the AUD/USD pair is likely to continue, indicates the risk reversals gauge.

AUD/JPY - Above 200-day MA & at 3-week highs

The AUD/JPY moved above the 200-day MA of 85.89 today, courtesy of a better-than-expected Aussie retail sales data and China services PMI release.

Australia October retail sales beat estimates

The official data released today shoed consumption as represented by retail sales rose 0.5 percent in October, beating the estimated rise to 0.3 percent from the previous month's print of 0.0 percent.