The Australian dollar rose today after the release of monetary policy meeting minutes that suggested the Reserve Bank of Australia is not planning to cut interest rates once again next month. The currency has trimmed its gains by now, losing them against the Japanese yen completely.
The RBA released minutes of its monetary policy meeting, which happened on August 6. The central bank signaled that interest rates will likely remain low in the foreseeable future:
Based on the information available and the central scenario that was presented, members judged it reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment and achieve more assured progress towards the inflation target.
The bank added further that, while it is prepared to cut rates again, policymakers want to wait and see if economic developments in Australia and abroad warrants additional monetary easing:
Having eased monetary policy at the previous two meetings, the Board judged it appropriate to assess developments in the global and domestic economies before considering further change to the setting of monetary policy. Members would consider a further easing of monetary policy if the accumulation of additional evidence suggested this was needed to support sustainable growth in the economy and the achievement of the inflation target over time.
That was consistent with the view that the RBA will not cut interest rates at the September meeting. The fact that the central bank does not plan to cut rates just yet provided a boost to the Aussie, making it a bit more appealing to traders.
The Australian dollar also got support from the positive market sentiment caused by the positive developments in the US-China trade conflict. Washington decided to postpone sanctions against Chinese tech giant Huawei by 90 days — a move that markets welcomed.
AUD/USD edged up from 0.6763 to 0.6779 as of 12:23 GMT today. EUR/AUD slid from 1.6371 to 1.6342. AUD/JPY was up from 72.12 to 72.35 intraday but has retreated to 72.09 by now.
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