Aussie Falls on RBA Minutes, Pares Losses on Positive Fundamentals

The Australian dollar sank after the minutes of the last central bank’s monetary policy meeting indicated that policy makers are ready to ease the policy further. Currently, the Aussie is attempting to reverse the losses on positive economic reports.
The Reserve Bank of Australia noted in its minutes that additional stimulus can be provided if it would be necessary:

If demand conditions were to weaken materially, the inflation outlook would provide scope for a further easing in monetary policy.

The RBA wasn’t very pessimistic despite the hints about more easing and had a surprisingly positive view on the situation in Europe:

Global economic and financial market developments had been somewhat more positive over the past month or so. Whereas the situation had been looking quite negative in early December, recent actions by the European Central Bank and euro-area governments had boosted confidence, although further measures would be required to bring about a comprehensive solution to place government finances on a sustainable footing. There had also been an encouraging pick-up in business surveys of the manufacturing and services sectors in most countries – including in Europe – over the past couple of months.

As for the domestic fundamentals, the central bank explained that conditions varied across industries, but generally were near the average trend and near expectations.
Today, several fundamental reports were released, showing positive developments in the Australian economy. Among them was the Conference board Leading Economic Index that rose 0.2 percent in December, following the 0.3 percent drop in the month before.
AUD/USD fell from 1.0752 to 1.0661 yesterday and traded near that level today, while AUD/JPY slid from 85.63 to 85.00 on the previous trading session before trading at 85.08 as of 00:14 GMT today. EUR/AUD was up from 1.2308 to 1.2410 yesterday and traded at about 1.2411 today.

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