The Australian dollar dropped today, touching the lowest level since March against the Japanese yen, after the Reserve Bank of Australian released minutes of its latest policy meeting. While the minutes mentioned some positive developments, there were enough dovish comments to drive traders away from the Australian currency.
Among pessimistic statements, the minutes mentioned subdued employment growth:
While a range of indicators suggested that conditions in the labour market had improved in recent months, the demand for labour remained subdued and was likely to remain so for some time.
The RBA was also not particularly optimistic about economic growth:
The Board noted that overall growth in coming quarters was likely to be below trend given expected slower growth in exports, the decline in mining investment and the planned fiscal consolidation.
As a result, the central bank concluded:
With growth in activity expected to pick up only gradually, and spare capacity in the labour market consequently remaining for some time, growth in domestic costs was forecast to remain contained.
While the RBA did not mentioned possibility of an interest rate cut, these comments were enough to hurt the Aussie.
AUD/USD dropped from 0.9328 to 0.9263 and AUD/JPY declined from 94.67 to 93.90 as of 11:32 GMT today. EUR/AUD advanced from 1.4691 to 1.4789.
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