The Australian dollar fell today after the release of monetary policy minutes by the Reserve Bank of Australia. The currency also declined as optimism about this week’s trade negotiations between the United States and China turned into cautiousness.
The RBA was less optimistic about economy both domestic and abroad, saying:
Slowing growth in China and ongoing trade tensions had led to lower growth in global trade. Forecasters had lowered their outlook for global growth and market participants no longer expected a further tightening of monetary policy in the United States.
As a result, the bias of the central bank was not longer hawkish:
Members noted that there were significant uncertainties around the forecasts, with scenarios where an increase in the cash rate would be appropriate at some point and other scenarios where a decrease in the cash rate would be appropriate. Moreover, the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year, when an eventual increase in the cash rate had appeared more likely.
With that said, policy makers did not anticipate changes in monetary policy anytime soon:
Given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy.
AUD/USD fell from 0.7128 to 0.7110 as of 10:41 GMT today after rallying to 0.7144 earlier. EUR/AUD gained from 1.5854 to 1.5898.
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