Australian Dollar Talking Points
AUD/USD[1] pulls back from the monthly-high (0.7337) as the Reserve Bank of Australia (RBA) Minutes does little to sway the monetary policy outlook, and the advance from the 2018-low (0.7021) may continue to unravel as the exchange rate extends the series of lower highs & lows from earlier this week.
AUD/USD Rate Carves Bearish Series Following Lackluster RBA Minutes
AUD/USD struggles to hold its ground even as the RBA transcript states that ‘the next move in the cash rate was more likely to be an increase than a decrease’ as the central bank appears to be in no rush to lift the official cash rate (OCR) off of the record-low.
It seems as though the RBA will continue to run the clock at the next meeting on December 4 as officials reiterate that ‘there was no strong case for a near-term adjustment in monetary policy,’ and Governor Philip Lowe & Co. may continue to tame bets for higher borrowing-costs as ‘members noted that there continued to be uncertainty about the degree of spare capacity in the labour market and the extent and speed of any pick-up in wages growth relative to the gradual increase incorporated in the latest forecasts.’
With that said, the RBA appears to be bracing for further depreciation in AUD/USD as ‘changes in the expected paths of monetary policy over the preceding year had been reflected in changes to financial market pricing, most notably a broad-based appreciation of the US dollar,’ and the growing interest rate differential may continue to drag on the exchange rate in 2018 especially as the Federal Open Market Committee[2] (FOMC) shows little to no interest in
