This morning, the Reserve Bank of Australia (RBA) released the minutes of the previous monetary policy meeting. The Australian dollar weakened upon the released of the dovish minutes.
In the recent monetary policy meeting, the members of the RBA were considering a reduction in the cash rate due to the slow progress being made towards achieving the Bank’s goal after having reducing the cash rate by 75 basis points. While having low interest rates can be supportive to the economy, the members realized that it can also be detrimental to the savers at the same time. Thus, the RBA decided to adopt a wait-and-see approach for now to allow the effects of the recent three rate cuts to kick in before making a full assessment on the monetary policy.
Although it seems unlikely from the minutes that the RBA will be reducing cash rate in December, this does not eliminate the possibility of doing so in the near future. The RBA stated towards the end of the minutes saying that they are “prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time”. As of now, Westpac expects a 25 basis points reduction in the cash rate in February 2020.
At the time of writing this post, AUD/USD has already regained its morning losses and is climbing higher. It seems like market participants are not ready for AUD/USD to break below the key level of 0.68. Look for short-term buying opportunities while keeping in mind that the U.S. FOMC meeting minutes will be released this Thursday at 0300 (SGT).
In the recent monetary policy meeting, the members of the RBA were considering a reduction in the cash rate due to the slow progress being made towards achieving the Bank’s goal after having reducing the cash rate by 75 basis points. While having low interest rates can be supportive to the economy, the members realized that it can also be detrimental to the savers at the same time. Thus, the RBA decided to adopt a wait-and-see approach for now to allow the effects of the recent three rate cuts to kick in before making a full assessment on the monetary policy.
Although it seems unlikely from the minutes that the RBA will be reducing cash rate in December, this does not eliminate the possibility of doing so in the near future. The RBA stated towards the end of the minutes saying that they are “prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time”. As of now, Westpac expects a 25 basis points reduction in the cash rate in February 2020.
At the time of writing this post, AUD/USD has already regained its morning losses and is climbing higher. It seems like market participants are not ready for AUD/USD to break below the key level of 0.68. Look for short-term buying opportunities while keeping in mind that the U.S. FOMC meeting minutes will be released this Thursday at 0300 (SGT).
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