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Currency Market Analysis

Jul 08, 2020 | Currency Market Analysis

Global Themes

RBA on hold

• Equities rally stalls
• Melbourne re-enters lockdown

RBA on hold

Yesterday the RBA kept the cash rate on hold as was expected. The central bank also released a statement concluding that the fiscal and monetary policy measures previously implemented have been effective and continues to be required for some time. In terms of when we are likely to see a policy shift from the RBA, it was commented “This accommodative approach will be maintained as long as it is required. The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2-3 per cent target band.” This implies the cash rate will not be lifted for a longer period.

Not in the statement was any mention of the Aussie Dollar’s recent strength which has continued to gain alongside recoveries in global equity markets. This suggests that the RBA is content with current market movements and it is less likely to intervene if the currency continues to strengthen.

Melbourne re-enters lockdown

Yesterday it was announced that the Melbourne Metro area would go back into lockdown as cases through community transmission continues to rise. This has put Australia’s economic recovery post Covid-19 into jeopardy, with the lockdown set to cost Victoria’s economy up to $2 billion a week. We saw this reflected in the dampening of exchange rates at end of yesterday and the ASX is set to fall this morning.

AUDUSD pulled back from the highs down 0.7% from yesterday’s peak, AUDJPY dropping 0.6% and AUDEUR falling back 0.3%.


Today’s economic calendar is light, with the market keeping a close eye on the US rising infection rates and the impact that is likely to take on the economy and their re-opening. Attention will also be on any further developments in the growing tension between Canberra and Beijing

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