ING: The AUD - FJElite

The Reserve Bank of Australia left rates unchanged at 4.35% today. Some argue that the added description of the policy as 'somewhat restrictive' means that the RBA is less likely to hike in future. However, Governor Sandra Bullock proved quite hawkish at the press conference, reminding the audience that the RBA sees inflation risks as skewed to the upside and admitting that the RBA did discuss the possibility of a rate hike at today's meeting. This prompted short-dated Australian yields to do a U-turn.

Our team does not see a further RBA rate hike this year, but from an FX perspective, we still see AUD/USD heading up to 0.73 bu uear-end.