Premium Watchlist Recap: RBA Monetary Policy Decision (September 2025)

The Reserve Bank of Australia (RBA) kept interest rates on hold at 3.60% as expected, but cautious commentary from Governor Bullock limited the Aussie’s gains.

Although policymakers voted unanimously to sit on their hands for now, their official statement struck a somber tone, noting that “recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected.”

Let’s examine which setups from our watchlist capitalized on this mixed RBA outcome and how they performed against a backdrop of U.S. government shutdown concerns and NFP positioning.

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The Setup

What We Were Watching: RBA Monetary Policy Decision for September 2025

• The Expectation: Markets anticipated the central bank would maintain rates at 3.60%
• Data outcome: RBA held as expected but struck a cautious tone, warning September quarter inflation “may be higher than expected” while noting the decline in underlying inflation had slowed.
• Market environment surrounding the event: Neutral to positive risk sentiment early week as U.S. government shutdown anxieties were offset by Fed rate cut optimism and gold’s march to record highs

Event Outcome

The RBA kept the cash rate unchanged at 3.60% in September, in a widely anticipated decision that reflected the central bank’s cautious approach amid mixed economic signals.

The central bank warned that “indications that inflation may be persistent in some areas” justified holding steady, while Governor Bullock emphasized the need to see the full effects of this year’s 75 basis points of easing before moving again.

During the press conference, Bullock also stressed that “we’re in a very difficult position with the property market,” but emphasized the RBA must focus on its inflation mandate. She refused to provide forward guidance, stating, “I’m not going to predict what the interest rate is going to be in the next three to six months.”

Key Takeaways:

• RBA held at 3.60% following three cuts in 2025 (February, May, August)
• The decision was unanimous among board members
• August monthly CPI jumped to 3.0% y/y from 2.8%, the highest since July 2024
• Q3 inflation “may be higher than expected”

Fundamental Bias Triggered: Bullish AUD setups

Broad Market and Exogenous Drivers:

Monday–Tuesday: Shutdown Anxiety Meets Risk Resilience

The week kicked off with mounting U.S. government shutdown worries as leaders scrambled for a last-minute deal. Despite the uncertainty, risk appetite held steady. The S&P 500 managed small gains as traders looked ahead to Fed rate cuts. Gold stole the spotlight, breaking fresh records near $3,825 on fiscal jitters and mixed Fed messaging. Bitcoin climbed past $114,000, cementing its growing role as a hedge against policy chaos. The dollar weakened broadly as shutdown fears mounted, while the yen outperformed after BOJ’s Noguchi hinted policy was entering a more delicate phase.

Midweek: Shutdown Begins, ADP Shocks Markets

The shutdown officially began on Wednesday, but risk assets stayed calm. The ADP report shocked markets, showing private payrolls fell 32,000 in September. With the BLS confirming no data releases during the shutdown, traders priced in deeper Fed cuts. Gold blasted through $3,900 and Bitcoin topped $118,000 as haven demand surged.

Thursday–Friday: Geopolitical Tensions and Positioning Flows

Markets wobbled as Russia warned of retaliation over missile deployments. Speaker Johnson’s refusal to negotiate deepened shutdown concerns. Gold eased to $3,865 on profit-taking, oil slipped to $60.60, and commodity currencies softened as traders squared up for the weekend.

AUD/NZD: Neutral-to-bullish Event Outcome + Risk-Off Scenario

= Arguably good odds of a net positive outcome

AUD/NZD started the week already trending higher, consolidating near 1.1350 with signs of an upside breakout. The RBA’s hold decision gave it a boost, sending the pair from around 1.1380 to 1.1415 as traders scaled back near-term easing expectations. But soon after, the RBA’s warning that September inflation “may be higher than expected” helped trim odds of a November rate cut.

Momentum faded during Governor Bullock’s press conference when she struck a “cautious, gradual” tone and avoided forward guidance, leaving the door open for future easing. That dented yield appeal and pulled AUD/NZD off its highs.

The pair hovered near 1.1400 on Tuesday before sellers stepped, arguably after rumors that China might halt iron ore imports, though that report was later debunked. By Thursday, weak Australian trade data and slower household spending likely helped pushed AUD/NZD back toward 1.1350, but Kiwi’s dovish outlook ahead of the RBNZ’s event the following week limited losses.

By Friday, the pair lingered just under 1.1350. Traders who caught the breakout could have caught around 60–80 pips to the 1.1400 psychological level and R2 Pivot Point area, thanks to the RBA’s hawkish tone and the Kiwi’s soft fundamentals, but active trade management would have been key to preventing turning that win into a potential loss.

Not Eligible to move beyond Watchlist – Bearish AUD Setups and Bullish AUD/JPY Setup

AUD/JPY: Neutral-to-bullish Event Outcome + Risk-On Environment

AUD/JPY 1-hour Forex Chart by TradingView

AUD/JPY had been stuck in a range ahead of the RBA decision. The RBA hold triggered an initial spike toward 98.00, but the move proved short-lived as Governor Bullock’s cautious press conference commentary emphasized gradualism.

Throughout the week, competing narratives created volatile swings – Wednesday’s shutdown and weak ADP data weighed on risk appetite, while Thursday’s Russia-Ukraine tensions sparked safe-haven flows before reversing on tech rally optimism. The critical move came Friday when JPY fell sharply after BOJ Governor Ueda’s speech avoided signaling any next rate move, disappointing traders expecting hawkish hints.

The setup was invalidated as the RBA’s cautious tone failed to provide the hawkish catalyst needed for sustained AUD strength, while the complex risk environment limited directional conviction.

AUD/CAD: Bearish AUD Event Outcome + Risk-On Environment

AUD/CAD 1-hour Forex Chart by TradingView

This pair had formed a symmetrical triangle through September, bouncing off support ahead of the RBA to climb above the Pivot Point (0.9130). The RBA hold initially lifted AUD/CAD but the momentum eventually faded as both commodity currencies faced similar pressures.

The bearish AUD scenario was invalidated by the target event outcome, as the RBA’s hawkish hold provided more support than anticipated. Additionally, CAD faced challenges beyond oil weakness – Canada’s Services PMI on Friday printed 46.3, badly missing 49.0 and highlighting service sector struggles alongside stagnant GDP data.

The pair maintained a ranging pattern through the latter half of the week, with neither currency establishing clear dominance, preventing the bearish AUD scenario from developing as anticipated.

AUD/JPY: Bearish AUD Event Outcome + Risk-Off Scenario

AUD/JPY 1-hour Forex Chart by TradingView

Our alternative bearish scenario – anticipating a dovish RBA surprise – was invalidated by the actual hawkish hold outcome.

The pair had formed a descending triangle with support around 97.40 near S1 (97.34), but the RBA’s warnings about upside inflation risks meant this setup never qualified to move beyond the watchlist stage.

The Verdict

The RBA’s September decision delivered a nuanced outcome that defied simple categorization as purely hawkish or dovish. While the unanimous hold and warnings about upside inflation risks initially supported the Australian dollar, Governor Bullock’s subsequent emphasis on remaining “cautious” and “data-dependent” without providing forward guidance tempered the hawkish interpretation.

AUD/NZD proved the most reliable setup for the week, benefiting from the convergence of the RBA’s cautious hold (which was relatively hawkish compared to pre-positioned sentiment), NZD’s vulnerability to aggressive RBNZ easing expectations (markets debating 25-50 bps cuts at the upcoming meeting), and favorable technical positioning. The pair’s advance from the 1.1320-1.1340 area toward 1.1400 and just shy of R2 (1.1420) offered clear profit-taking opportunities for those who managed risk appropriately.

Overall, we rate the AUD/NZD setup as “neutral-to-not-likely” supportive of a net positive outcome, as the pair delivered on the anticipated bullish bias with clear technical levels for both entry and profit-taking. The setup briefly benefited from parallel monetary policy divergence (cautious RBA hold versus dovish RBNZ expectations), favorable technical positioning above the 1.1300 support, and came within striking distance of the identified R2 profit target.

Traders who employed appropriate risk management – either taking profits at R1 or adjusting stops when price tested R2 resistance – likely captured substantial gains from this setup. For those who decided to hold longer with active trade management to reduce risk and/or lock in profits, likely saw a negative outcome given the slow pullback in the latter half of the week.

Key Takeaways:

Central Bank Language Can Support Currency Despite Lack of Clear Forward Guidance

The RBA’s decision demonstrated that even when a central bank refuses to provide explicit forward guidance, the relative tone compared to market positioning matters enormously. Markets had been pricing in increasing odds of November easing ahead of the decision, so the RBA’s warnings about upside inflation risks and emphasis on waiting for full Q3 CPI data before moving again effectively reduced near-term cut expectations.

This created space for AUD strength despite Governor Bullock’s refusal to commit to a policy path. The key was recognizing that “cautious” and “data-dependent” rhetoric in this context meant the bar for October/November easing had been raised, not that cuts were imminent.

Application: When analyzing central bank communications, always compare the actual tone and language to what markets had been pricing in beforehand, rather than judging the statement in isolation. A “neutral” statement can be relatively hawkish if markets were positioned for dovish signals.

Parallel Fundamental Vulnerabilities in Counter-Currencies Enhance Setup Conviction

AUD/NZD worked particularly well because both currencies had clear fundamental drivers pointing in opposite directions. While Australia’s RBA was signaling caution about cutting further, New Zealand faced persistent expectations for aggressive RBNZ easing (25-50 bps debate) at the upcoming meeting. This parallel divergence created stronger conviction than setups where only one currency had a clear fundamental catalyst.

By contrast, AUD/JPY struggled because both currencies faced conflicting signals – Australia’s cautious hold versus its weak trade data, Japan’s labor market softening versus safe-haven flows. When both currencies in a pair have mixed fundamental pictures, technical levels, and risk sentiment often dominate, creating choppier, less reliable directional moves.

Application: Prioritize setups where the target currency’s fundamental catalyst is matched by clear opposing drivers in the counter-currency. Scan the economic calendar for both sides of the pair to identify where monetary policy divergence, growth differentials, or commodity correlations are most pronounced.

Fresh Counter-Currency Developments Can Override Target Event Outcomes

Friday’s dramatic JPY selloff after BOJ Governor Ueda’s speech served as a critical reminder that even well-positioned setups based on one currency’s event can be completely overridden by unexpected developments in the counter-currency. Traders positioned for AUD/JPY downside based on Japan’s labor market data and hawkish BOJ expectations saw their thesis invalidated when Ueda failed to signal further tightening.

This underscores the importance of remaining flexible and monitoring both currencies continuously, even after the target event has passed. The trading week doesn’t end when your anticipated event concludes – fresh catalysts can emerge at any time that reshape the fundamental landscape.

Application: After your target event concludes, continue monitoring the economic calendar and central bank communications for the counter-currency. Build flexibility into your trade management plans to adjust or exit positions if fresh developments alter the fundamental picture. Consider using trailing stops that lock in profits while allowing room for favorable moves to continue, protecting against sudden reversals from counter-currency catalysts.