We suspect that today’s decision by the Reserve Bank of Australia (RBA) to leave interest rates on hold at 2.0% is nothing more than a pause in the loosening cycle that could yet result in rates falling to 1.5% by the end of the year. Such a move would catch the markets on the hop, which explains why we expect the Australian dollar to weaken to around US$0.70 by December, from US$0.77 now.
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