PRECIOUS METALS: Gold & Silver Lower As USD Rises, More US Jobs Data Later

ACGBs (YM -1.0 & XM -1.5) are little changed after leaving the cash rate at 3.60%, as unanimously expected. 

• The RBA Board decided to keep the cash rate unchanged, noting that inflationary pressures persist amid recovering private demand and a still-tight labour market.
• Although financial conditions have eased, the Board expects the impact of earlier rate cuts will take time to materialise.
• Citing more persistent inflation and heightened uncertainty, it chose to remain cautious and data dependent. The Board reaffirmed its commitment to price stability and full employment, saying it will adjust policy as needed based on developments in the global economy, domestic demand, inflation, and the labour market.
• Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's modest sell-off
• Cash ACGBs are 1bp cheaper with the AU-US 10-year yield differential at +24bps.
• The bills strip is -1 to -3 across contracts.
• RBA-dated OIS pricing had implied just a 3% probability of a move today. As it currently stands, the OIS market has a 75% chance of a 25bp cut by mid-2026.
• The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond on Wednesday and A$800mn of the 3.00% 21 November 2033 bond on Friday.

The AUD/USD has had a range today of 0.6518 - 0.6541 in the Asia- Pac session, it is currently trading around 0.6525, -0.20%. The RBA held rates and the AUD/USD slipped a few spreads lower with the market perhaps looking for a more hawkish RBA. The AUD/USD is firmly back within its recent 0.6400-0.6650 range with the pivot between 0.6500-0.6550 finding some demand first up.

• The RBA is clearly still concerned with inflation and the data going forward now will be critical as this line in the statement suggests. "Given this, and the recent evidence of more persistent inflation, the Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve."
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6625(AUD 944m). Upcoming Close Strikes : 0.6500(AUD822m Nov 7), 0.6600(AUD682m Nov 7) - BBG

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The AUD went into the RBA meeting trading around 0.6535(-0.05%) and the SPI was trading around 8836.0(-0.75%).”RBA LEAVES CASH RATE TARGET AT 3.60%; EST. 3.60%, MAY BE ‘LITTLE MORE’ CORE INFLATION PRESSURE THAN THOUGHT." The AUD has moved a few spreads lower as the market was perhaps looking for a more hawkish outcome.

• AUD/USD - 0.6525, -0.20%
• AUD/NZD - 1.1450, +0.05%
• EUR/AUD - 1.7665, -0.20%
• AUD/JPY - 100.55, -0.25%
• SPI(XPU5) - 8856, -0.50%