AUD flows: AUD softens as RBA loses bias to tighten
RBA statement shifts to balanced risks, pushing AUD yields and AUD/USD lower. Risk sub 0.65
AUD/USD fell back overnight after what was perceived as a dovish shift in forward guidance. The key forward guidance statement of "Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks." has been changed to "The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.". The wording effectively removes the bias to tighten, suggesting a hike or a cut are equally likely.
AUD yields are lower as a result, and spreads point to potential for some further losses against the USD. Softer equities, particularly regionally, are also not helpful for the AUD, and AUD/USD could now test support in the 0.6450-0.65 region.
