The RBA is almost universally expected to leave the cash rate unchanged following its Board meeting on Tuesday. Given this it will be the tone of the statement that drives any AUD response. We will be particularly interested in what the RBA has to say on the AUD rebound in recent weeks. Risks seem skewed to the RBA strengthening their attempt to talk down AUD, especially given the recent Fed “no-taper” surprise. Developments in Washington are likely to remain the overriding driver in the near-term, however, with risk sentiment likely to remain fragile until the budget and debt ceiling impasses are resolved.
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