Reserve Bank of Australia meeting minutes more dovish than expected
The Australian Dollar tumbled lower against the U.S Dollar on Tuesday after the Reserve Bank of Australia meeting minutes were significantly more dovish than expected. The Aussie fell on the foreign exchange market as traders and investors now expect that the RBA will reduce interest rates at next months policy meeting.
The minutes of the August policy meeting showed that the Australian central bank was considering additional rate cuts to support domestic growth and also to anchor the Reserve Bank of Australia’s inflation goals. The AUD/USD pair quickly unwound from multi-week trading highs, as traders immediately price-in an additional twenty-five basis point rate cut in October.
RBA policymakers also noted that wage pressure remained muted due to a reduction in economic confidence, while the local industry has unexpectedly outperformed the central bank’s expectations. Recent data showed that the Sino-U.S trade war appeared to be having less of an effect on the Australian mining sector.
The Australian Dollar also suffered due to poor housing data and being over-stretched to the upside against the greenback ahead of Thursday’s monthly job report, which is expected to show a rise in the nations unemployed rate and a slowdown in the pace of Australian job creation.
Antipodean currencies were generally bearish on Tuesday, with the New Zealand Dollar suffering heavy losses against the U.S Dollar due to the release of weaker-than-expected consumer sentiment data. Traders have been turning significantly more bearish towards the kiwi, with the NZD/USD pair falling back towards multi-year trading lows.
AUD/USD Daily Candlestick Chart| Source: ActivTrader
Sellers will need to hold the AUD/USD pair below the $0.6800 level to encourage the next round of technical selling towards the $0.6770 area. According to Fibonacci analysis, AUD/USD bulls may test back towards the $0.6930 level if they can hold price above the important $0.6840 technical region.
Written by Nathan Batchelor, External Analyst, ActivTrades
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