THE TAKEAWAY: RBA July meeting minutes suggest reduced case for further easing > Inflation outlook provides scope for further easing > US data likely movers of the pair > AUD/USD Higher
The Australian Dollar traded higher against the US Dollar after the Reserve Bank of Australia released minutes for its July meeting that seemed to support a reduced case for further easing in August. The Board noted economic activity “continued to grow at below trend pace,” with mining and non-mining investment outlooks uncertain. However, they saw the effects of past interest rate cuts working in a range of indicators — most apparent in the housing market — and believed “this process had further to run.” Their assessments concluded that the current rate was “appropriate for the time being,” but the inflation outlook could still provide scope for further easing.
Indeed, market priced-in expectations declined to 15% from yesterday, showing investors now only expect at 53% chance of an August RBA rate cut.
Investors will likely look toward US data tied to inflation and housing to influence their expectations on Federal Reserve policy. US CPI data is scheduled for release later today at 12:30 GMT, and Housing Starts data is scheduled for tomorrow at 12:30 GMT.
AUD/USD (5-Minute Chart)
Source: FXCM Marketscope
Jimmy Yang, DailyFX Research Team