RBA Minutes Overview
For Aussie traders, we have the RBA minutes of March's meeting. Of key interest for markets will be how the RBA have perceived the condition of the nation's housing and jobs market. There are concerns that the housing market is in a bubble and that there is still too much slack in the labour force and how the full-time/part-time switch pertains to underemployment and a risk to wage growth.
How could affect AUD/USD?
The Reserve Bank left the official cash rate on hold at 1.5 per cent for the sixth meeting in a row as widely expected due to the the national accounts that had been released a week prior that showed a marked turnaround in economic growth. In fact, the Reserve Bank governor Philip Lowe spoke three times about keeping rates on hold the month before in order to balance the need to boost inflation while maintaining financial stability amid record household debt.
So, while there were no surprises, the detail of the minutes could offer potential catalysts in respect to the possibility of either future hikes or cuts expectations. The last time the official cash rate increased was November 2010 while inflation has remained below the Central Banks preferred target band of between 2-3%. The jobless rate has been stuck around 5.75 percent since early last year. However, some economists have forecasted a rate rise by the end of this year, but most expect the cash rate to remain steady, while a handful said the RBA could trim the cash rate further. If there appears to be a bias one way or the other, the Aussie could be a mover, but it is highly unlikely that the minutes will reveal anything new to the market. The more immediate concerns are jobs, housing and, in respect of longer term concerns, the global headwinds Australia's economy could face with respect to what to expect from Trump in terms of world trade.
- AUDUSD: Reached a solid resistance
- AUD/USD analysis: bullish 0.7834 likely target on an advance beyond 0.7760
From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that the pair has been unable to sustain gains beyond the 0.7700 level since early 2015, but have rallied up to 0.7834 in the way, which means caution is advised on-going long at current levels. What may help the AUD to extend its rally is a recovery in base metals that traded softly this Monday.
- Metal prices: Gold pushed to a two-week high - ANZ
- Housing and wages to be key elements in today's RBA minutes - ANZ
About the RBA Minutes
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.
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