Coming into today, traders were pricing in a probability of ~41% for an August rate hike. Right now, that is seen somewhere in the range of ~12% to ~16% as the OIS market is still fluctuating. In terms of basis points, the former was ~10 bps while the latter is 3-4 bps currently. But regardless, traders are not really pricing in rate cuts still for now.
RBA implied rates, based on OIS pricing
Taking that into consideration, the drop in the aussie fits with the narrative that the RBA just disappointed a small section of the market that was hoping for more of a hawkish tilt. However, the central bank certainly did not shut the door on rate hikes in the months ahead.
It is going to depend a lot on the data moving forward. But at least for now, there’s no major repricing in the rates market on the RBA outlook at least. It’s just a toning down of rate hike expectations at best.