MUFG Research discusses its reaction to the RBA's August policy decision.
"The commodity-related G10 currencies of the Australian and New Zealand dollars have outperformed overnight driven by a hawkish repricing of domestic central bank rate expectations. It has helped to lift the AUD/USD and NZD/USD rates back above the 0.7400 and 0.7000 levels respectively," MUFG notes.
"The stronger Australian dollar has been encouraged by the RBA’s decision to stick to their plan to begin tapering the pace of QE purchases to AUD4 billion/week in September down from the current pace of AUD5 billion. The decision came as a hawkish surprise to market participants and ourselves who had anticipated that at the very least the RBA would delay taper plans in response to the negative impact from the latest round of lockdowns that are hitting Australia’s economy," MUFG adds.