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Australian Dollar (AUD) Broadly Stronger after RBA Minutes, AUD/USD Climbs
Published: 17 Feb at 12 PM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Australian Dollar Exchange Rate, Currency Exchange, Canadian Dollar Exchange Rate, Euro Crisis, UK, Exchange Rates, Economy, Inflation,
After trending on the backfoot since the Reserve Bank of Australia took the unexpected step of cutting interest rates at its February policy meeting, the Australian Dollar was able to recoup some of its recent losses during the local session. The Australian Dollar to Euro exchange rate edged up to 0.6852 while the AUD/USD pairing surged by over 0.8%. The Australian Dollar also gained 0.6% against the Pound to achieve a high of 0.5085.
The minutes were far from upbeat, and did stress that there is the possibility of an Australian housing bubble forming, but as they indicated that the RBA is unlikely to cut interest rates beyond the current record low in the foreseeable future, the ‘Aussie’ broadly strengthened following their publication.
The minutes indicated that the central bank had considered cutting borrowing costs in March but decided that moving at the February meeting offered ‘the opportunity of early additional communication in the forthcoming statement on Monetary Policy.’ The RBA also stated; ‘Housing price inflation had moderated from the rapid rates seen in late 2013, but remained high and in Sydney and Melbourne had been well above the growth rate of household income.’
Industry expert Annette Beacher said of the minutes; ‘The economy needed support, the forecasts looked weak with an unchanged 2.5% cash rate, and the board decided to cut at that meeting to use the Statement of Monetary Policy Forecast Framework to explain why. This debate dilutes the urgency for a consecutive March rate cut, as the timing was down to preference, not an urgent need to deliver a surprise ‘insurance’ cut like the Bank of Canada.’
The AUD/GBP pairing went on to fluctuate during the Australasian session following the release of the UK’s inflation data for January. While the nation’s non-core CPI slowed by more-than-forecast, core CPI climbed unexpectedly – reducing UK deflation concerns. However, while the Pound was able to gain on the US Dollar after the data was published, the Australian Dollar largely held the gains posted against its British peer.
During the Australasian session further Australian Dollar movement could be caused by domestic data – including the nation’s Conference Board Leading Index and Westpac Leading Index.
The minutes were far from upbeat, and did stress that there is the possibility of an Australian housing bubble forming, but as they indicated that the RBA is unlikely to cut interest rates beyond the current record low in the foreseeable future, the ‘Aussie’ broadly strengthened following their publication.
The minutes indicated that the central bank had considered cutting borrowing costs in March but decided that moving at the February meeting offered ‘the opportunity of early additional communication in the forthcoming statement on Monetary Policy.’ The RBA also stated; ‘Housing price inflation had moderated from the rapid rates seen in late 2013, but remained high and in Sydney and Melbourne had been well above the growth rate of household income.’
Industry expert Annette Beacher said of the minutes; ‘The economy needed support, the forecasts looked weak with an unchanged 2.5% cash rate, and the board decided to cut at that meeting to use the Statement of Monetary Policy Forecast Framework to explain why. This debate dilutes the urgency for a consecutive March rate cut, as the timing was down to preference, not an urgent need to deliver a surprise ‘insurance’ cut like the Bank of Canada.’
The AUD/GBP pairing went on to fluctuate during the Australasian session following the release of the UK’s inflation data for January. While the nation’s non-core CPI slowed by more-than-forecast, core CPI climbed unexpectedly – reducing UK deflation concerns. However, while the Pound was able to gain on the US Dollar after the data was published, the Australian Dollar largely held the gains posted against its British peer.
During the Australasian session further Australian Dollar movement could be caused by domestic data – including the nation’s Conference Board Leading Index and Westpac Leading Index.
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Source: moneytransfer.co.uk