AUD/USD was sent lower to 0.6959 before climbing to 0.6985 and is settling near levels prior to the RBA decision
The RBA decision pretty much had a bit of everything for everyone.
For aussie bears, the central bank reaffirmed their view by cutting its cash rate and then highlighting spare capcacity in the labour market as well as some concerns about inflation and the global economic outlook.
For aussie bulls, the fact that the RBA maintained its inflation forecast and didn't signal much urgency (yet) to cut rates again in August is of much relief. With over ~82% of the decision earlier priced in, bulls can argue for a "sell the rumour, buy the fact" move but with the RBA having postured for more rate cuts down the road, I reckon gains will be limited.
So, what can we expect next from the RBA and for the aussie?
It's clear that more rate cuts will be coming if economic conditions and the global outlook continues to stay subdued. The RBA kept that door open but another 25 bps rate cut in August looks unlikely in my view, unless labour market conditions deteriorate rapidly and the US-China trade dispute blows up into a full-blown war.
If anything, I reckon a rate cut towards Q4 2019 looks more likely given recent developments but we'll see how things play out over the next few weeks/months.
As for today, aussie price action is still very much trapped in between the key hourly moving averages as noted earlier. Topside momentum remains limited by the 100-hour MA (red line) @ 0.6995 and offers around 0.7000.
The next key risk event will be RBA governor Philip Lowe's speech at 0930 GMT, where he'll be delivering remarks at a RBA board dinner with the business community in Darwin. Last month after the June meeting, he said that "it was not unreasonable to expect a lower cash rate". So, just be wary of any commentary he may offer later on in the day.
