The RBA left its benchmark rate at 3.5% as expected and offered no hints that it was looking to lower rates anytime in the near future, causing Aussie to rally towards the 1.0300 figure in late Asian session trade. The RBA repeated many of it prior points noting that global growth has slowed, the commodity prices important to Australia have fallen sharply and that weaker recent indicators point to uncertainty on Chinese growth going forward.

However, the central bank also stated that, “ interest rates for borrowers are a little below their medium-term averages. The impact of those changes is still working its way through the economy, but dwelling prices have firmed a little and business credit has picked up this year.” Overall the RBA has essentially reaffirmed its stance that “monetary policy remained appropriate,” disappointing the doves who had expected a more accommodative posture from Australian monetary officials.

The Aussie rebounded from its recent swing lows to trade at 1.0280 at the start of the European session on some light short covering in the wake of the RBA announcement. The pair has traded heavy over the past several days as economic data from China and Australia itself has shown marked deterioration as demand in the region continues to slow. However, with monetary policy still neutral, the Aussie may see some short term relief and it risk flows accelerate as the day progresses the pair may make another run at the 1.0300 barrier.