AUD/USD falls as RBA holds rates at 4.35% despite 92% cut expectations

AUD/USD dropped 0.8% (55 pips) to 0.6620 following the Reserve Bank of Australia's decision to keep the cash rate unchanged at 4.35%, defying market expectations. Traders had priced in a 92% probability of a 25 basis point rate cut, making the hold decision a significant hawkish surprise. The decision was split, with 6 members voting to maintain rates while 3 favored a cut, highlighting internal disagreement within the RBA board. The Australian dollar initially spiked on the announcement before retreating as markets digest the implications. Governor Michele Bullock's upcoming press conference will be crucial for understanding the RBA's forward guidance and rationale behind maintaining restrictive policy. Technical indicators show immediate support at 0.6600, with resistance emerging at 0.6680. The unexpected hold suggests the RBA remains concerned about inflation persistence, potentially delaying rate cuts until late 2024.