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Talking Points:

  • AUD/USD climbs after RBA meeting minutes released
  • Transcript supports RBA’s neutral monetary policy tone
  • RBA rate cut bets continue to fade as bond yields rise

Find Key Turning Points for the Australian Dollar with DailyFX SSI

The Australian Dollar climbed against its US counterpart after the Reserve Bank of Australia released its December meeting minutes. In the transcript, the central bank said that recent flow of domestic data had generally been positive. In addition, output growth is expected to strengthen gradually over the next 2 years. Core inflation rates remained stable, but generally below the central bank’s target.

The RBA said that the Australian Dollar is adjusting to significant declines in key commodity prices and boosting demand for domestic production. The central bank reiterated that the outlook for inflation may afford some scope for further easing. In addition, the board will continue to assess the outlook and judge whether or not the current state of monetary policy is most effective for sustaining growth.

Overall, the meeting minutes likely further weighed on RBA rate cut bets. Indeed after the transcript was released, Australian front-end government bond yields rallied. The document appeared to justify the central bank’s relatively neutral monetary policy tone. Upcoming economic news flow remains on the RBA’s spotlight. Overnight Index Swaps are pricing in a 56 percent probability of rate cut from the Reserve Bank of Australia over the next 12 months.

AUD/USD Climbs as RBA Minutes Further Weigh on Rate Cut Bets