The gains came to a halt after the RBA released minutes of its September rates decision, which showed the central bank's board is worried about the recent turmoil in Chinese financial markets. The gains came to a halt late morning when the RBA released minutes of its September rates decision, which showed the central bank's board is worried about the recent turmoil in Chinese financial markets. "Overall, international economic developments had increased the downside risks to the outlook," the RBA noted, but added it "was too early to assess the extent to which this would materially alter the forecast for GDP growth in Australia's trading partners". Dovish interpretation of RBA stance The Aussie fell about a quarter of a cent to US71.20¢ as some traders interpreted the minutes as showing a more dovish tilt in the RBA's stance, slightly increasing the likelihood of another rate cut.

But JPMorgan economist Stephen Walters said the minutes offered little in terms of concrete policy guidance, indicating it remained comfortable to keep the rate steady for now. "Our assessment remains that it would take a lot for the RBA to trim the cash rate from here," Mr Wolters said. "It likely would take more profound disappointments in markets or in conditions in Australia's major trading partners, alongside domestic deterioration, including a higher jobless rate." The minutes put an at least temporary end to a recovery in the Aussie that began late last week after better than expected local employment data, and continued after the leadership change in Canberra, amid a sense that the currency had been oversold during the recent markets rout. Analysts said the change in leadership could, over the medium term, provide a much-needed boost to consumer and business confidence, which in turn is likely to support the economy and ultimately the Australian dollar. Citi analyst Josh Williamson said the change in both the PM but an expected new Treasurer should be positive for financial markets.

Sentiment readings adversely affected "We think both business and consumer sentiment readings have been adversely affected for a number of months by the lack of economic and fiscal policy direction under Tony Abbott and Joe Hockey," Mr Williamson said. RBC Capital Markets head of economics Su-Lin Ong agreed the changes in Canberra could short-circuit the business confidence malaise. "We expect a boost to business confidence, which remains below its long-run trend and has struggled to maintain any momentum in recent years," she said. "Malcolm Turnbull's narrative of engaging in informed economic debate rather than catchphrases provides some hope that previously forgotten inquiries into areas that could increase economic growth, productivity and supply side reform could now receive more attention."

Ms Ong added that a rise in confidence could well prevent the Reserve Bank from cutting the cash rate another time. "The RBA's frustration over the lack of 'animal spirits' and pick-up in non-mining investment has been well articulated over the past 12 months and the confidence factor has, in our view, been the missing link."