RBA Minutes Confirm They’re ‘More Likely’ To Ease Further | AUD/JPY, AUD/NZD, GBP/AUD

The RBA’s minutes revealed what many had expected, by stating it’s ‘more than likely’ they’ll have to ease further in the period ahead.

The RBA’s minutes revealed what many had expected, by stating it’s ‘more than likely’ they’ll have to ease further in the period ahead.

Summary From RBA Minutes on Monetary Policy

  • Members judged that a decline in interest rates was unlikely to encourage a material pick-up in borrowing by households that would add to medium-term risks in the economy
  • Risks to the forecasts for growth and inflation in both directions
  • It was more likely than not that a further easing in monetary policy would be appropriate in the period ahead.
  • Lower interest rates were not the only policy option available to assist in lowering the rate of unemployment".
  • In assessing whether further monetary easing was appropriate, developments in the labour market would be particularly important.

The biggest mover of the session so far is AUD/JPY, which dropped 0.4% after the release and is currently today’s biggest mover among FX majors and crosses.  Currently at its lowest point since January’s flash-crash, bears remain keen to sell into any pullbacks in line with its bearish trend structure. Over the near-term, it’s arguable that prices are a little stretched (as really, nothing major and new was revealed in the minutes), although the Japanese yen is the strongest major Trump is sending 1,000 troops to the Middle East.

GBP/AUD has shown its ability to provide wild swings, although the recent rally from the June low appears to be running out of steam. Resistance has been found at the 50 and 100-day MA, where a bearish hammer and pinbar formed ahead of yesterday’s bearish engulfing candle yesterday. Furthermore, this potential swing high has failed to test the 38.2% Fibonacci level to further highlight how the dynamics appears to have changed on the cross. From here, we remain bearish whilst it trades below the 1.8390 – 1.8410 area.

AUD/NZD has managed to hold above a 50% retracement level, although price action has essentially remain in a choppy sideways correction. Furthermore, prices are trapped between the 50 and 100-day MA’s, with the 200-day MA also providing resistance. However, a potential bullish flag could be forming which, if successful, projects a target around 1.0900. Yet we’d need to see bullish momentum break the 200-day MA or prior swing high before assuming a bull flag is playing out. Keep an eye on NZ GDP data tomorrow as this could prove a bullish catalyst for AUD/NZD if it misses the mark by a wide enough margin.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.