AUD/USD drops to session lows below 0.7090 after RBA rate decision

• AUD is being offered at press time, possibly in response to RBA's change in language on the labor market and its impact on wage growth.
• AUD/USD is currently trading at session lows below 0.7090, having clocked a high of 0.7130 immediately post-RBA rate decision. The central bank kept the interest rates unchanged as expected. 

AUD/USD jumped 25 pips to 0.7130 immediately after the RBA's rate decision only to fall back to levels below 0.71.

The central bank kept rates unchanged as expected and said the continued improvement in the labor market "is expected" to lift wages over time, marking a slight downward revision from the March statement which had said the continued improvement in the labor market "should" lift wages.

The bank also said that downside risks arising from the external sector have increased and took note of the slowdown in household spending while mentioning that higher levels of spending on public infrastructure and an upswing in private investment as factors supporting growth outlook. 

The change in the language on the labor market is AUD-negative. As a result, the AUD/USD pair could extend the decline during the day ahead of the pre-election budget, which is expected to include tax cuts and cash handouts. The budget announcement is due later today.

Technical Levels