RBA likely to remain cautious and hope for a weaker AUD

Australian interest rates did not fall. The Australian central bank (Reserve Bank of Australia, RBA) left its interest rates unchanged this morning and left room for a further decline in AUD-USD.

"Even a weaker AUD will not put the inflation target at risk. AUD was able to appreciate following the decision. Many investors are likely to have expected more outspoken comments regarding the exchange rate", says Commerzbank. 

In fact the RBA merely pointed out that AUD was adjusting to significant falls in commodity prices. The RBA's wait and see approach is appropriate in view of the positive economic developments, even though it still depends on the weak AUD. 

"There is not much scope for a stronger AUD. Unless commodity prices rise notably the RBA is likely to remain cautious, hoping for a weaker AUD", added Commerzbank.