The Reserve Bank of Australia is expected to hold its cash rate steady at 4.35% when it meets in August, according to TD Securities strategist Prashant Newnaha. The call follows weaker-than-expected S&P Australia Flash Composite PMI data showing softening demand across the economy. New orders declined while price pressures moderated, signaling reduced inflationary risks that give the RBA breathing room to pause its tightening cycle.
The data suggests Australia’s economy is cooling under the weight of previous rate hikes, reducing the urgency for further monetary policy action. Traders should watch for confirmation in upcoming employment and inflation prints, as any unexpected strength could shift rate expectations. Australian dollar pairs may see limited volatility if the August hold materializes as anticipated, with AUD likely to track broader risk sentiment and commodity prices rather than domestic rate speculation.
FXnCO Insight
Position for RBA policy stability through August, focusing AUD trades on external drivers rather than domestic rate repricing until fresh economic data challenges the hold narrative.
Source: FXStreet