FXstreet.com (Barcelona) - The RBA minutes from the August policy meeting were the highlight of the overnight session in Asia. The RBA again referred to the unusual strength of the Australian dollar, which persists despite the weakening global outlook and the falloff in commodity prices. Again, the currency's strength was attributed to foreign buying of Australian bonds, but this time the RBA made specific mention of purchases of a modest amount of AUD by the Swiss National Bank.
The minutes implied these purchases were a consequence of diversification activity related to the SNB's efforts to maintain the floor in EUR/CHF at 1.2000. AUD/USD advanced modestly on the headlines but failed to break above 1.0500 until the dollar selloff swept risk assets higher in Europe.
According to Chris Walker, a Research Analyst at UBS, “We very much doubt the RBA is poised to intervene in the currency markets, and if the tightening impact of a strong currency eventually becomes too severe, the bank is far more likely to respond with rate cuts rather than a round of FX intervention.”
The minutes implied these purchases were a consequence of diversification activity related to the SNB's efforts to maintain the floor in EUR/CHF at 1.2000. AUD/USD advanced modestly on the headlines but failed to break above 1.0500 until the dollar selloff swept risk assets higher in Europe.
According to Chris Walker, a Research Analyst at UBS, “We very much doubt the RBA is poised to intervene in the currency markets, and if the tightening impact of a strong currency eventually becomes too severe, the bank is far more likely to respond with rate cuts rather than a round of FX intervention.”
