TD Research notes that at its July meeting, the RBA left rates unchanged but its tone continues to stand apart from the rest of the G10.
“The RBA stands alone in this regard after it decided to leave its statement mostly unchanged from the June one. This left some in the market that were looking for a more constructive tone disappointed,” TD notes.
“Still, we were surprised the Bank did not use the recent rally in AUD and tighter financial conditions to push back further on the FX side. Domestic factors are still key for the RBA but we expect stronger FX language in the Aug SoMP if AUD resumes its upward trend,” TD argues.
As such, TD is looking for a bigger correction in AUD and likes the prospects of long GBP/AUD near-term.
Source: TD Securities Research
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