AUD/USD Immediately Higher on RBA Minutes But Corrects Lower
THE TAKEAWAY:Reserve Bank of Australia releases August meeting minutes > Investors likely interpreted RBA intensions to hold off further rate cuts > AUD/USD Higher
The Australian Dollar traded higher against the US dollar as the Reserve Bank of Australia released its August meeting minutes. Yield-seeking investors likely found assurance in RBA rhetoric suggesting consideration for a further rate cut but not in the near-term. The board members “agreed that the Bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates.” However, the central bank also noted sluggish outlooks on Chinese growth and domestic inflation. This could give scope for the RBA for further easing to encourage economic growth and reduce the appeal of the Aussie to return-seeking traders.
Prices moved nearly 30 pips higher before falling to new intraday lows. The lack of follow-through in the initial rally likely speaks to the absence of substantial deviation from the RBA's policy statment. This likely cements expectations for a neutral monetary stance in the near term with a dovish bias in the long run. At the time of this writing, Currency Strategist Ilya Spivak sees intraday resistance in the 0.9111-21 area.
AUD/USD (5-Minute Chart)
Source: FXCM Marketscope
Jimmy Yang, DailyFX Research Team