Forex Marketz Daily Forex News – Fully Markets Update
The Australian dollar (AUD/USD) moved higher this morning after the Reserve Bank of Australia (RBA) released its last monetary policy minutes from last month’s rate decision. The central bank was quite upbeat about domestic economic prospects. However, the RBA did stick to their usual caveats.
The RBA kept its official cash rate (OCR) unchanged at its 1.5 percent record low on July 1. However, the central bank expressed worry about the negative effects of a stronger local currency would have on the local economy. This was hardly a new theme for the central bank. Thus rhetoric has had little effect, as the AUD/USD Forex market has climb up to current levels. However, the rhetoric has been dialed up in recent weeks. The Australian dollar, has remained stubborn and is still near a two year high against the US dollar and has not fallen far.
The central bank noted improvement in the global economy. Particularly with their trade partner China and the European Union. Policy makers also said that recent data suggested better domestic economic growth in the second quarter. This has supported the AUD in the aftermath of the minute’s release.
The RBA is concerned about Debt and Housing Prices
Policy makers continue to state that house prices and household debt levels warranted “careful monitoring.” Expectations of low wage growth coupled with high debt levels might deflate consumer spending.
The central bank is still worrying that the high cost of home ownership, coupled with sticky low wages, is making it tough on domestic demand. The central bank did say that recent, strong employment data could see wages rise. Policy makers and investors will now wait on official labor market numbers. These will be released Thursday.
There was also the customary warning that further strength in the Australian Dollar could lead to weaker inflation and slower growth.
