FOREX: Asia FX Wrap - BBDXY Testing First Support

ACGBs (YM -12.0 & XM -8.0) are 3-6bps cheaper after the RBA surprised the market by leaving the cash rate at 3.85%. A 25bp rate cut today was given a 92% probability ahead of the decision by the market. 

• The RBA Board sees inflation risks as more balanced and the labour market as strong, but remains cautious due to uncertainty in demand and supply. It will await more data to confirm inflation is tracking toward 2.5%.
• Policy remains flexible to global developments. A 6–3 majority supported today’s decision, and future statements will include an unattributed record of votes. The Board remains focused on price stability and full employment.
• Cash ACGBs are 6-8bps cheaper after the decision with the AU-US 10-year yield differential at -11bps.
• The bills strip has shunted cheaper, with pricing -5 to -12 after the decison.
• RBA-dated OIS pricing is 11-23bps firmer across meetings after the decision. A cumulative 64bps of easing priced by year-end versus 75bps pre-RBA
• Tomorrow, the local calendar will see a speech by RBA Hauser.
• The AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond tomorrow and A$1000mn of the 2.75% 21 November 2029 bond on Friday.

The RBA has left rates unchanged in a surprise decision. The AUD went into the Meeting trading around 0.6510 and quickly moved to 0.6550 on this as the market was almost fully priced for a cut.*RBA: JUDGED RISKS TO INFLATION HAVE BECOME ‘MORE BALANCED’ - BBG

• AUD/USD - 0.6545, +0.83%
• AUD/NZD - 1.0862, +0.32%
• EUR/AUD - 1.7950, +0.50%
• AUD/JPY - 95.50, +0.75%
• XPU5 - 8550, -0.26%
• EOY  OIS 1-10bps higher, bear steepener yields 1-5bps higher

• RBA SAYS BOARD WANTED MORE DATA, CAN WAIT