The RBA keeps with a more dovish stance for the time being


There are two things to take away from the RBA policy decision today and both really weren't anything the market wasn't expecting.

The decision not to move YCC purchases to November 2024 bonds was expected and the RBA extended QE (sort of) with some added flexibility - by reducing the rate of purchases to A$4 billion per week until 11 November 2021.

The latter just means that the RBA is still going to keep with its current policy outlook until Q4 this year and that isn't going to signal any imminent shift in the aussie dollar outlook at least for the time being.

The RBA is at least acknowledging improved economic conditions but still, this continued dovish stance may not bode too well for the aussie especially if other major central banks are looking to tighten, or at least preempt that, in the next few months.

In particular, the RBNZ call today marks a significant divergence between the two central banks and could pressure AUD/NZD lower towards the May lows near 1.0600 next.