Talking Points:
- The Reserve Bank of Australia’s policy minutes went over old ground
- Housing and employment merit watching, as does Australian Dollar strength
- The People’s Bank of China Governor spoke shortly before the minutes’ release. He focused on financial sector reform
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The Australian Dollar didn’t move much Tuesday following the release of minutes from the Reserve Bank of Australia’s June 6 monetary policy meeting.
That conclave saw the Official Cash Rate left on hold at its record, 1.50% low, as had been universally expected. Indeed, rate futures markets don’t price in any changes to the OCR this year or, indeed, well into next.
The RBA said once again that it was watching labor and housing markets closely, which will probably mean data on those subjects retain the most power to move the currency in the months ahead. They certainly did last week when a blockbuster set of official employment figures gave AUD/USD wings.
The minutes repeated the RBA’s now-common warning that a rising Australian Dollar would complicate the country’s necessary economic adjustment. They also fretted about slow wage growth and under-employment, but again these are old themes and failed to make much impact on AUD/USD.
Shortly before the minutes’ release, People’s Bank of China Governor Zhou Xiaochuan spoke in Shanghai. He kept away from monetary policy, by and large, confining himself to worrying about the “global uncertainties” to which every central banker now must refer.
Zhou was however forthright about the need to deepen global financial reform, warning that instability in finance can lead to “chaos.” He was also vocal about opening Chinese financial services to international competition, saying that protectionism here could lead to “slackness” while competition means prosperity. He also said that the China International Payments System would officially be launched in Shanghai.
Making up a triumvirate of economic news which has signally failed to move the Aussie Tuesday, official house price index was revealed to have gained 2.2% in the second quarter. That was down from the previous quarter’s 4.1% rise, but the on-year gain was still a chunky 10.2%.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
