AUD/USD feels the pull of gravity after RBA minutes
- AUD has shed 15 pips following the release of the minutes of the RBA's April meeting.
- The marked slowdown in the Aussie GDP contradicts the sustained labor market strength, according to the RBA minutes.
- The board expects inflation to remain muted for some time.
The Aussie dollar is slowly inching lower in response to the minutes of the Reserve Bank of Australia's April meeting, which said the marked slowdown in GDP growth is at odds with the improvement in the labor market.
While the board saw no strong case for a near-term rate move, it remained open to cut rates if inflation remains low and the jobless rate ticks higher, the minutes released soon before press time revealed. Further, the board members that inflation is likely to remain muted for some time despite the gradual progress on unemployment.
As of writing, the AUD/USD pair is trading at a session low of 0.7147 - down 17 pips from the pre-RBA minutes level of 0.7164.
The RBA's language on growth and inflation is AUD-negative. Indeed, the central bank sees further improvement in the labor market. However, many consider it as a lagging indicator. Also, so far, the labor market strength has failed to boost wage-price inflation.
That said, the downside in the AUD will likely be limited if the risk assets remain bid on the US-China trade optimism.
Technical Levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
