The Australian dollar was firm today amid the generally positive market sentiment. While today’s domestic macroeconomic data was good, it was of limited importance, and traders are more interested in tomorrow’s employment report. Meanwhile, markets wait for the FOMC monetary policy announcement that will happen later today.
The six-month annualized growth rate in the Westpac-Melbourne Institute Leading Index (which shows the likely pace of economic activity relative to trend three to nine months into the future) improved from â4.42% in July to â2.56% in August. Westpacâs Chief Economist, Bill Evans predicted that the index will continue to improve in the next months:
Note that the big negative shock that accompanied the COVID outbreak back in March-April will start cycling out of the six- month growth rate calculation in coming months. Indeed, all else being equal, the growth rate will swing into solid positive from September on as the extreme weakness in March-April moves into the base of the calculation.
The Reserve Bank of Australia released minutes of its September policy meeting yesterday. The notes did not reveal anything new, except for the statement about the policy in the future:
The Board affirmed its commitment to supporting jobs, incomes and businesses in Australia. It agreed to maintain highly accommodative settings as long as required and to continue to consider how further monetary measures could support the recovery.
Some analysts thought that the words mean that the RBA considers cutting interest rates further, though the general consensus is that the central bank is not in a hurry to act and will not change its policy very soon.
AUD/USD gained from 0.7301 to 0.7336 as of 10:19 GMT today. EUR/AUD fell from 1.6222 to 1.6192. AUD/JPY went up from 76.99 to 77.14, rebounding from the daily low of 76.73.
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