Reserve Bank of Australia sounded less optimistic about economic recovery while providing details regarding monetary policy options ahead. The RBA policy member said that in a most probable scenario, it would take more than three years for sufficient progress towards full employment and target inflation.
The AUD/USD exchange rate continued to decline and it looks ready to challenge the August low of 0.7076.
The US dollar strength also dragged the pair along with the central bank observations.
Deputy Governor Guy Debelle has recently listed RBA options: expanding the yield target program, intervention in foreign exchange markets, lowering interest rate without entering the negative zone, and negative interest-rate policy.
The bank will follow the best course of action after weighing the unfolding scenario, according to Debelle; the official cash rate is at 0.25 Percent – a record low. RBA sees the recovery to have a protracted nature and has shown an inclination for further monetary support to assist businesses and households.
RBA’s next meeting on October 6 is on the same day as Treasurer Josh Frydenberg’s federal budget update. Traders will check whether the central bank deploys more non-standard measures then and the crowding behaviour in AUD/USD might continue with the retail traders being net-short the pair since April.