The Australian dollar has extended its losses for a sixth straight day and is down 2.5% during that period. In the European session, AUD/USD is trading at 0.6736, down 0.29%.
RBA minutes: Board Considered Scenarios for Raising and Lowering Rates
The Reserve Bank of Australia released the minutes of its September meeting on Tuesday. The Board noted that underlying inflation remained too high and members remained “vigilant to upside risks to inflation”. Board members felt that maintaining the cash rate at 4.35% was appropriate in order to balance the risks of inflation and the strong labor market.
The Board said that it had devised scenarios for lowering, holding or raising rates due to the “uncertain economic outlook”. Monetary policy going forward would depend on inflation levels and the strength of the economy. Notably, the Board said that the RBA’s cash rate would not have to “evolve in line” with the rates in other countries. This was a clear attempt to dampen expectations of a rate cut due to the fact that other major central banks have embarked on a rate-cutting cycle.
The bottom line is that the RBA, which meets on November 5, hasn’t made up its mind about rate policy and all possibilities remain on the table. The RBA remains very focused on data and the next rate decision could be based on next week’s employment report and the quarterly inflation at the end of the month.
In the US, it’s a quiet day with no tier-1 events and the focus will be on Fedspeak. There are a host of Federal Reserve members delivering remarks today and Wednesday and the markets will be looking for clues about the size of the next rate cut.
AUD/USD Technical
- AUD/USD is testing support at 0.6730. Next, there is support at 0.6703
- There is resistance at 0.6770 and 0.6797