The Reserve Bank of Australia (RBA) is up for releasing a minute statement of its August 07 monetary policy meeting at 01:30 GMT on Tuesday. The central bank met market-wide expectations of announcing no change to its benchmark cash rate during the meeting. However, the central bank’s quarterly monetary policy report holds its dovish stand, renewing fears of additional rate cuts during the year. As a result, investors will seek more details of the catalysts that led to such a decision in order to predict any such upcoming moves and predict near-term trade direction of the AUD/USD pair.
Ahead of the minutes, TD Securities spotted clues that investors will seek in the minutes:
Labour outcomes remain key to further RBA easing. Any indication the RBA sees other Central Banks as potentially easing further would be viewed as bond bullish.
On the other hand, Westpac turns down the importance of the meeting minutes as it says:
The steady hand on the cash rate at 1.0% was fully expected. The statement on the day said it “is reasonable to expect that an extended period of low interest rates will be required” and that the RBA will “ease monetary policy further if needed.” We have obviously heard a lot from the RBA since the meeting, in speeches and the quarterly statement.
How could the minutes affect AUD/USD?
While recent statistics at home and China have failed to lure bulls, traders will seek clues that can stop the central bank’s rate cut trajectory at least during the current year.
Technically, buyers will enter only if the pair manages to cross monthly tops surrounding 0.6822, which in turn opens the door for a fresh leg up to June low surrounding 0.6831 and then to May bottom near 0.6860. It should also be noted that an area between 0.6750/45 and 0.6735 offers strong downside support to the pair ahead of dragging it to sub-0.6700 region.
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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