Forex Marketz Daily Forex News – Fully Markets Update
The Australian dollar, especially the AUD/USD Forex market came under pressure this morning after the Reserve Bank of Australia (RBA) released their last monetary policy meeting minutes.
That monetary policy meeting took place on October 3. The RBA left the record low 1.50 percent official cash rate alone. This was as expected. However, the minutes did reveal that RBA policy officials see no “mechanical implications” for Australian rates from tighter monetary policy in other countries. This means that tighter monetary policy in the United States or Europe does not mean the RBA must also follow the path to higher rates. Decisions will remain data dependent.
The Australian central bank also, once again, expressed worry about the effects concerning excessive local currency strength. The AUD has fallen lower over the last couple of months. Still, the AUD/USD Forex market remains close to its 2017 high. This was also a two year high. The RBA minutes also warned that a further “material” rise with the Australian Dollar could lead to slower growth and weak inflation.
The Australian Dollar follows the RBA
The RBA did say again that much of that AUD/USD strength or weakness is dictated by the US dollar side. In central bank terms, it could also be the reason as to why the RBA is unwilling to offer anything beyond jawboning for local currency guidance. The RBA, in reality, cannot alter global sentiment with the US Dollar.
Looking more into the minutes, the RBA expressed hope that continued job creation would support consumer spending. Thus better inflation. The bank also noted house prices were coming down in of Sydney and Melbourne.
