AUD/CAD: The RBA left rates unchanged as expected. Small tweaks to the statement saw AUD drift lower on the release but has clawed back ahead of the NA open. The RBA expects inflation to remain low for some time, giving it some wiggle room to cut rates if necessary. That said, the base case if for the RBA to stay on hold with some scope to tweak policy next year if inflation undershoots persist. This shifts the focus to the Q3 inflation report released later this month.
AUD still best-placed to outperform CAD and other majors.
Our high-frequency fair value model shows the cross is overvalued, but the gap is not wide enough to fade yet.
We like buying AUDCAD dips with our models flagging topside near 1.028.
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