The Reserve Financial institution of Australia (RBA) stunned the markets with a call to maintain rates of interest on maintain at 3.85% as an alternative of slicing to three.60%. How did our watchlist setups for this top-tier catalyst fare?
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The Setup
- What We Had been Watching: RBA Financial Coverage Assertion (July 2025)
- The Expectation: Rate of interest lower from 3.85% to three.60%
- Information end result: Charges maintained at 3.85% whereas RBA Governor Bullock reiterated “cautious, gradual stance” on easing
- Market atmosphere surrounding the occasion: Impartial to risk-on; Easing geopolitical considerations and cautious risk-taking as merchants began shrugging off tariff considerations
Occasion Final result:
The RBA delivered a shock choice to maintain charges on maintain at 3.85% regardless of the market consensus of a 0.25% rate of interest lower. The choice was made in a break up 6-3 vote, which additionally marked the primary time the central financial institution printed its voting breakdown.
Key factors from the RBA assertion:
- Latest month-to-month CPI knowledge got here in “barely stronger than anticipated”
- Board needs extra affirmation that inflation stays on observe for two.5%
- Cited heightened uncertainty about world commerce insurance policies and home demand
Throughout the press convention, RBA Governor Bullock recommended additional cuts stay probably as soon as they acquire extra confidence within the inflation trajectory. The central financial institution famous that with charges already 50 foundation factors decrease than 5 months in the past, they may afford to attend for extra knowledge.
Basic Bias Triggered: Bullish AUD Setups
Market sentiment swung between warning and optimism all through the week as merchants navigated tariff uncertainties forward of the July 9 deadline.
The week opened with danger aversion after Trump threatened 10% tariffs on BRICS nations and introduced 25% levies on Japan and South Korea by August 1. This sparked safe-haven flows into gold and the greenback whereas pressuring danger property.
A temporary bump in risk-taking was seen main as much as the RBA choice when Trump talked about in a press briefing that the August 1 deadline is agency however “topic to negotiations” and that he’s “open to different concepts,” whilst extra tariff letters have been being despatched out.
A turning level got here with the FOMC minutes launch on Wednesday, revealing a rising divide amongst policymakers on the size and timing of future rate of interest cuts. This dovish shock triggered a pointy drop in Treasury yields and broad greenback weak point whereas lifting equities and bitcoin to new highs above $116,000.
Vitality markets noticed important volatility, with WTI crude initially surging on Houthi assaults within the Purple Sea and OPEC+ manufacturing will increase, earlier than reversing on weak Chinese language demand forecasts. The Australian greenback emerged as a star performer after the RBA stunned markets by holding charges at 3.85%, whereas Fed officers’ feedback about potential charge cuts regardless of tariff-induced inflation saved danger urge for food supported, no less than till Trump hit Canada with a 35% risk on Friday!
AUD/CHF: Web Bullish AUD Occasion end result + Threat-On Situation = Arguably finest odds of a internet constructive end result
AUD/CHF 1-hour Foreign exchange Chart by TradingView
In our watchlist, we anticipated that AUD/CHF would discover assist on the backside of its descending channel in case the RBA stunned with a call to carry as an alternative of slicing by 0.25%. Our thesis was based mostly on a mix of potential risk-on flows from easing world commerce tensions and dovish expectations for the SNB.
Though the pair already bounced off the channel backside forward of the occasion as a consequence of cautious optimism amid the U.S. tariff deadline extension, the precise occasion nonetheless triggered a bullish AUD response and a sustained rally to the channel resistance and past.
AUD/CHF hovered close to the highest of its channel as risk-off flows picked up following affirmation that the tariff deal deadline was pushed to August 1. That extension saved uncertainty in play and inspired some merchants to lock in positive factors.
The following day, the FOMC minutes confirmed that “a few” members have been in favor of a July charge lower. That weighed on U.S. 10-year yields and the greenback, giving the Swiss franc a carry as safe-haven demand returned. AUD/CHF pulled again towards pre-event ranges close to the S1 assist.
Nonetheless, the pair discovered its footing and staged a stronger breakout from the channel later within the week, supported by dovish Fed commentary that saved the door open for decrease U.S. borrowing prices. Merchants additionally shrugged off recent tariff threats and as an alternative priced in stronger demand for equities and renewed hopes for U.S. commerce offers.
Not Eligible to maneuver past Watchlist – Bearish AUD Setups and GBP/AUD quick technique
GBP/AUD: Bullish AUD Occasion end result + Threat-Off Situation
GBP/AUD 4-hour Foreign exchange Chart by TradingView
Whereas the occasion end result supported a bearish setup on GBP/AUD, the broader danger temper heading into the RBA choice didn’t fairly match. Markets have been leaning optimistic, probably hoping for one more “TACO” situation or progress on commerce offers after the tariff deadline was pushed again.
Nonetheless, the RBA shock would have performed out properly for the pair, which had already bounced off the vary resistance zone close to R1 and the two.1000 main psychological degree we had our eyes on.
GBP/AUD saved the bearish momentum going beneath the pivot level, paused for a fast pullback, then resumed its slide all the way down to the vary assist at S1 and past.
Urge for food for European currencies pale as U.S.-EU commerce talks stay unsure and the U.S. rolled out extra tariff warnings. In the meantime, danger sentiment turned extra constructive, and merchants disregarded the unimplemented threats, giving commodity currencies just like the Aussie a recent increase. Lastly, GBP was knocked decrease on Friday due to weaker-than-expected UK GDP updates, sending GBP/AUD to recent intraweek lows a number of hours forward of the shut.
AUD/NZD Brief: Web Bearish AUD Occasion end result + Threat-Off Situation
AUD/NZD 1-hour Foreign exchange Chart by TradingView
AUD/NZD dipped towards the Pivot Level degree forward of the RBA choice, however that transfer wasn’t actually in regards to the RBA’s stance. The drop probably mirrored broader danger jitters tied to tariff uncertainty, particularly after the U.S. slapped a 50 p.c tariff on copper imports, a transfer that weighed on the Aussie earlier than the occasion even kicked off.
As soon as the RBA stunned markets by holding charges regular, AUD/NZD shortly popped greater, leaping from round 1.0825 to above 1.0870. The choice marked a transparent coverage divergence from the RBNZ, which had saved its dovish tone intact this week.
From there, the pair prolonged its positive factors because the Aussie drew extra assist from the pickup in danger urge for food than the New Zealand greenback did. Optimism over commerce offers, recent Fed charge lower speculations, and broad USD weak point gave the foreign money a stable tailwind.
AUD/JPY Lengthy: Bearish AUD Occasion end result + Threat-On Situation
AUD/JPY 1-hour Foreign exchange Chart by TradingView
Our unique dialogue on AUD/JPY was invalidated instantly with the RBA shock, however for many who adjusted to the brand new data and tailored to it, probably may have seen favorable outcomes.
Not like in our technique setup, AUD/JPY didn’t drop nearer to the channel assist earlier than the RBA choice. The 94.40 degree held agency, and as an alternative of dipping, the pair turned greater forward of the occasion because the yen took successful following the U.S. announcement of a 25% tariff on Japanese items.
That anti-yen sentiment spilled into Tuesday and sure helped gas AUD/JPY’s sharp transfer greater after the RBA stunned with a charge maintain. The pair broke above its earlier July highs, then paused for a short pullback on Wednesday because the FOMC minutes boosted Fed charge lower expectations and gave the yen a short-lived carry.
By the tip of the week, AUD/JPY was again on the transfer, breaking by the R2 Pivot Level resistance as merchants probably leaned on that RBA maintain shock, and falling odds of BOJ charge hikes after weaker-than-expected Japanese PPI knowledge on Friday.
The Verdict
Our basic evaluation and watch situation based mostly on enhancing danger urge for food and a internet constructive AUD end result leaned in favor of a possible lengthy AUD/CHF setup.
Our technical evaluation nailed the channel backside assist zone as a possible space of curiosity for lengthy entries forward of the occasion, plus the potential of the pair sustaining its bounce momentum again above S1 and the pivot level degree if sentiment continued to lean in favor of danger currencies after the RBA choice.
And due to further risk-on flows from the FOMC minutes and Fed rhetoric within the latter a part of the week, AUD/CHF was poised to increase its upside previous the channel resistance onto R1 then R2.
Total, we assess this as probably supportive of a internet constructive end result since AUD was already having fun with a little bit of a risk-on increase pre-event and managed to carry its floor earlier than one other push greater on Thursday.
The alignment of basic and technical components made for a simple play: Tariffs deadline delay supported risk-taking, coverage divergence between RBA and SNB highlighted in shock maintain choice, and Fed easing narrative led to a different wave greater.
Nonetheless, commerce administration and execution would have performed a minor position, as short-term pullbacks in the course of the RBA press convention and tariffs bulletins in a while may have supplied higher entry alternatives with greater return-on-risk in comparison with breakout performs.
Key Takeaways:
Function of Exterior Components
With all of the market give attention to tariff developments, it’s no shock that precise bulletins and even threats of countermeasures have induced enormous swings in sentiment, taking part in a key position within the end result of the AUD setups.
Commerce headlines and Trump’s Reality Social posts may have gone both manner, so the significance of being fast in your toes when it comes to actively managing open positions can’t be overstated, particularly for the reason that RBA choice befell early within the week earlier than an entire host of different market occasions unfolded.
Making Entry and Threat Changes
Whereas the watchlist setups pinpointed key inflection factors for commerce entry targets, a number of market developments main as much as the precise RBA occasion already allowed the degrees to carry and a few momentum to return into play.
Changes to entry ranges to account for these worth actions must also include acceptable modifications to cease losses and/or place sizes to make sure correct danger administration whereas staying versatile with targets. On this case, sustaining a bullish AUD bias regardless of midweek dips would have saved AUD/CHF in a stable place to reap the benefits of the post-FOMC danger rally previous preliminary conservative targets.
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