Stephen Gallo, European Head of FX Strategy at BMO Financial Group said they were sideswiped by Governor Stevens’ overnight remarks. Key Quotes: “We pin the bulk of the move lower in the currency on the following factors, with a specific focus on some of the things we might have previously missed” “The probability of the August RBA statement containing any preventative remarks regarding additional AUD weakness is quite likely to be nil (this would especially seem to be the case given that the trade-weighted AUD is already below its historical average, so Stevens’ remarks are a pretty clear sign that the RBA would welcome the additional monetary easing offered by a weak/weaker value of the AUD)”. “There may be some dissatisfaction at the RBA with the pace of improvement in the non-resource sectors of the economy thus far, and the overall contribution to GDP growth from residential investment/consumption spending, since the current easing cycle first started in late 2011”. “The “wait-and-see” period adopted in the July RBA minutes (previous exchange rate depreciation and monetary easing taken into account) for some reason in particular appears to have been quite short, if Stevens’ remarks today are meant to be an indication that the August statement is unlikely to strike the same tone as the minutes”. “Taking these three points above into account, within Stevens’ remarks neither the idea that the current outlook for inflation provides “scope” for further monetary easing nor the notion that the resource investment spending glut is set to be a persistent drag on GDP growth mark anything new for the RBA, and this left us being intrigued by the CHF’s outperformance versus the AUD during the London morning”.