U.S. Markets closed

RBA Minutes Fail to Prop Up Aussie

Boris Schlossberg, Director of Currency Research, GFT

The RBA minutes released in early Asian session trade were relatively upbeat in their assessment of the economy Down Under but new from BHP Billiton regrading possible curbing of their investment projects sent Aussie tumbling towards the 1.0550 level.

The RBA  minutes stated that, “Members noted that the past month had seen an improvement in the prospects for the global economy, with European policymakers making progress in addressing the region's debt and financial problems. Major downside risks were seen to remain, but the probability of a very bad outcome in the near future had receded a little further.” The RBA concluded, “On balance, the Board considered that it was appropriate for interest rates to be around their average levels, which was judged to be the case at present. The Board would continue to monitor both how the global economy evolved and the course of domestic economic activity and prices. “

The overall tone of the RBA minutes suggests that the Australian monetary policy makers are in no hurry to lower rates further judging economic conditions to be in broad state of equilibrium. However, the despite the relatively hawkish ton Aussie tumbled in the aftermath of the release on comments by BHP Chairman that the company was reassessing projects due to slowdown in China. The news has pushed the pair towards 1.0560 and it remains under pressure at the start of European trade and will likely underperform for the rest of the day as traders weigh the prospect of slower growth in Asia Pacific region.