- The Australian Dollar continued to gain on its enfeebled US rival despite RBA minutes fretting its strength
- The minutes showed continued focus on domestic jobs and housing too
- However they may look a little more historic than usual this month, given market action since the meeting they cover
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The Australian Dollar continued to rise against its US cousin Tuesday despite the release of policy-meeting minutes from the Reserve Bank of Australia which again fretted the consequences of its rise.
The minutes cover the RBA’s July 4 monetary conclave, after which the Official Cash Rate was left on hold at its 1.50% record low as expected.
They added little to markets’ sum total of RBA knowledge. The central bank’s focus remains on Australia’s labour market, where welcome improvement was noted. However, the minutes said that “underemployment was still elevated” and that wage pressures were “subdued.” The housing market is also an old RBA concern but the minutes said that it was yet too early for tighter home-lending rules to have taken full effect.
Rate-setters took yet another chance to repeat their view that “a rising Australian Dollar would complicate economic rebalancing.” However, AUD/USD was on the rise Tuesday nevertheless with the greenback under general pressure. Markets were already rethinking the pace of likely US interest-rate hikes in the face of weaker economic data. News that two more Republican Senators would oppose a healthcare-reform bill backed by the White House as flagship legislation also weighed on the US currency.
The RBA minutes may look more-than-usually historic this month given that rethink, and this week’s Chinese economic data which showed unexpected strength.
Current futures-market pricing forecasts no increase in Australian interest rates until the end of 2018 at the earliest.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX