OCBC’s Christopher Wong notes the RBA kept rates at 4.35% while retaining a tightening bias, signalling readiness to hike if needed. However, slowing growth and rising unemployment point to a prolonged pause. AUD/NZD is seen as toppish as the RBA nears cycle end and the RBNZ leans more hawkish, though the Australian Dollar remains supported by its G10 yield advantage.

RBA bias but extended pause likely

"Holding Pattern: Australia’s RBA kept rates steady at 4.35% after three consecutive hikes earlier this year. In both the statement and press conference, policymakers retained a tightening bias, noting they stand ready to hike if needed."

"Inflation remains above target, but growth is slowing and unemployment has edged higher. This backdrop points to an extended pause, even as the RBA resists calling an end to the hiking cycle."

"AUDNZD appears toppish as the RBA nears the end of its cycle while the RBNZ leans more hawkish. Still, the AUD should find support from its position as a top yielder in G10 FX."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)