Aussie Swings to Loss as RBA’s Lack of Hawkish Talk Disappoints

• Aussie Swings to Loss as RBA’s Lack of Hawkish Talk Disappoints

Australia’s dollar swung to a loss after the central bank kept interest rates unchanged, and disappointed some traders who had bet that it would echo the recent hawkish rhetoric of its major peers.

The Aussie fell as much as 0.7 percent, as investors chased spot lower and hit bids to clear longs from leveraged accounts, according to traders who declined to be named as they aren’t authorized to speak publicly. Traders had increased the odds that the Reserve Bank of Australia will raise rates, following a shift in tone from the European Central Bank, Bank of England and Bank of Canada last week.

“The lack of a hawkish turn should disappoint the market and this is weighing on the Aussie,” said Peter Dragicevich, a currency strategist at Nomura Singapore Ltd. “We continue to think the RBA will lag other central banks given the slack that remains in the economy and subdued inflationary pressures.”

The central bank, which left rates at a record-low 1.5 percent, noted in its statement that housing prices have started to ease and even decline in some markets, suggesting that there’s less pressure to act to dent the growth in debt. While business conditions have improved, consumption growth remains subdued, it said.