Watch the RBA’s views on soaring house prices and the falling Australian

The New Zealand dollar gained against its trans-Tasman counterpart after Australia’s unemployment rate unexpectedly rose, matching a 13-year high on a swelling labour force.

“Again, with the US Federal Reserve/RBA policy set to diverge further in the months ahead, and with the AUD still vulnerable to adverse shocks from the Chinese economy or from global commodity markets, I wouldn’t rush out to declare the four-year downtrend in AUD/USD over, but it’s not the most attractive short looking forward”, he added.

It is the third month in a row the RBA has left the cash rate on hold after cutting in May this year to the current 2% level.

Major currencies closely linked to commodities prices recovered some ground on Tuesday after a rough few weeks, as oil prices steadied and Australia’s central bank changed its tone.

“At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent”.

“The biggest movement this time was among the longer-term fixed home loan rates, with five-year fixed rates increasing by as much as 0.3 percentage points, and 0.02 percentage points on average, in July”.

Sales for the second quarter also beat expectations with an inflation-adjusted increase of 0.8 per cent, thanks in large part to the spillovers from a booming housing market.

In such circumstances, monetary policy needs to be accommodative. The Australian dollar gained after the statement.

Tuesday’s announcement was more implicit than explicit and suggested rates may stay on hold for the foreseeable future, said Jasmin Argyrou, a senior investment manager at Aberdeen Asset Management. “Low interest rates are acting to support borrowing and spending”, he said. The Australian dollar is adjusting to the significant declines in key commodity prices.

The falling value of the Australian dollar and steps by regulators to try and slow the property market were other reasons commonly identified by respondents as to why the rate would remain unchanged.

Prior to today’s meeting Peter Boehm, from onthehouse.com.au, said he would’ve been “very surprised” to see the cash rate move in either direction in August.

Given the inherent volatility of this series, the change in employment in any one month should be interpreted with care, and the 38,500 rise in July is no different.