RBA minutes overview
The RBA minutes are due today at 0130GMT after the RBA, as widely expected, left the official cash rate at 1.50% at its July meeting, unchanged yet again. The minutes fall on the same week as the Aussie jobs this time around, and also as the Aussie is at lofty heights, scoring fresh daily highs on the back of last week's bearishness around the greenback and US economy. Additional emphasis on labour market conditions will be of greater importance this time around also given that the Governor’s statement removed last month’s observation that “growth in hours worked remains weak”.
Markets are not expecting any hawkish surprises in the text of the minutes, although one theme that is emerging again is the strength of the Aussie, and considering that there are three RBA speakers this week, jawboning of the currency lower is potentially on the cards and this will be an additional aspect that markets will be looking for within the minutes this time around.
Moreover, given the lack of guidance in the previous statement that accompanied the last decision to hold, traders will be looking to the minutes for additional insight, "particularly if medium term policy normalisation issues were discussed," analysts at Westpac explained, adding, " however, we suspect the Bank will continue to hold a pointedly neutral stance on policy guidance."
.How could the minutes affect AUD/USD?
Valeria Bednarik, chief analyst at FXStreet explained the key event this week will be June employment data next Thursday, but, in the meantime, she noted that the pair remains at multi-month highs, with the risk still towards the upside.
"Short term, and in the 4 hours chart, the 20 SMA has extended its advance below the current level, whilst technical indicators have managed to correct extreme overbought readings, with the Momentum indicator now flat well above its mid-line and the RSI indicator heading south around 67, indicating limited bearish potential at the time being," Valeria Bednarik explained.
On additional hawkish rhetoric in the minutes, the Aussie could push the barriers having already broken the April 2016 highs and weekly resistance. 0.7920 and the Jan 2015 highs are a key target. To the downside, 0.7571 on the wide is a key weekly support below 29 June highs of 0.7712.
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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