There were two key surprises within the RBA Board’s July statement: the tapering of weekly purchases to AUD4 B per week and therefore the change to the forward guidance by removing “at the earliest.” So, although the Federal Reserve Bank of Australia sounded a touch bit more hawkish than expected, economists at Société Générale expect AUD bulls to face hurdles because the Federal Reserve System is leading the hawkish camp.
AUD/USD lagging commodity price by miles
“The Australian dollar has gained 4% against the US dollar and fewer than 1% against the NZD since the RBA’s commodity price level hit its end-2015 low. That fall had dragged AUD/USD from overflow parity to under 0.75. The rebound initially helped the currency a touch but since 2018 AUD/USD is essentially indifferent to commodity prices and follows rate differentials more closely, spending much of last year catching up with the effect of the Fed’s advance those. this is often now a challenge for AUD bulls, because the RBA seems committed to a technique of keeping rates down until after the Fed has hiked.”