AUD/USD reacts to release of RBA meeting minutes

ForexNewsNow | Published on July 19, 2011 at 2:53 am

The Australian dollar fell from 1.0642 to 1.0611 vis-a-vis the US dollar immediately following today’s release of the minutes from July board meeting of the Reserve Bank of Australia (RBA), indicating that currency traders saw it as an indication that interest rates may be on hold for the next several months.

Later today, the Aussie was slightly gaining ground against the US dollar, trading at 1.0625 as of around 6:35 A.M., GMT.

The Australian currency is up 0.170% on the day and has reached a session high of 1.0652 with a low of 1.0600 so far.

In the RBA meeting minutes, the board announced that its current monetary policy remains appropriate, and gave no indication of the likelihood of an interest rates cut, which had been predicted by some economists. The RBA also said its forecast for robust economic growth this year of 4.25% was unlikely to be achieved, and referenced the need to raise rates “at some point.”

The RBA said that debt problems in the euro zone are a bigger threat to global growth than most first thought. The meeting minutes also pointed to caution among consumers and a high dollar rate as dampening activity domestically.
This is what the analysts had to say about the RBA’s meeting minutes:

– According to Su-Lin Ong from RBC Capital Markets, “the minutes indicate that the best course of action for the Reserve Bank at the moment is inaction. It captures an RBA that is in a difficult position as it tries to balance medium-term domestic capacity and inflation pressures against a deteriorating and particularly uncertain global backdrop.”

– Despite forecasting a rate cut by December, Westpac’s chief economist Bill Evans says the Reserve Bank’s minutes indicate that next week’s inflation reading for the June quarter could still trigger a rate rise if it comes in much higher than anticipated. “While we think that this outcome is unlikely to cause a rate hike it appears that the Board will be prepared to move if the number is very high” he says.

 

For more exclusive Online Forex News,  follow us on Twitter or join us on Facebook.

Comments

Subscribe

Sign up for our Newsletter

Top Forex Brokers

CySEC/FSA Regulated
$5 Min. Deposit
Welcome bonus of $30
T&Cs apply
Social Trading
$50 Free Bonus
Old Broker
Own Trading Platform
US Traders
Social Trading

Binary Options Video