- AUD / USD down 10 pips after May RBA meeting minutes released
- The RBA minutes showed that the decision makers are in standby mode.
- The central bank did not buy bonds during the week ended May 11.
- Trade tensions on Tuesday keep increases in the AUD at bay.
The AUD / USD fell from 0.6535 to 0.6525 after the minutes of the May meeting of the Reserve Bank of Australia (RBA) published at 01:30 GMT.
“The members felt that the best way was to monitor the economy and the financial results. The Bank’s package of measures worked broadly as expected,” the minutes said. In addition, the minutes revealed that the board of directors was prepared to increase bond purchases if necessary and was in favor of the objective of controlling the yield curve until credible progress was made. made on the employment and inflation front.
Although the bank remains committed to increasing bond purchases, if necessary, it has recently ended things. The central bank chose to give up any bond purchases in the week of May 11 and stayed on the sidelines, perhaps because of the target for three-year bond yields of 0.25%. In addition, the syndication of the new bond in December 2030 was strong, suggesting that the bond market is working well, as noted by the research office of the Australia New Zealand Bank (ANZ).
This makes the RBA relatively hawkish than its other G-10 counterparts. AUD therefore has an advantage over other major currencies.
At the time of publication, the AUD / USD is trading around 0.6530, after hitting a high of 0.6555 an hour ago. While overnight gains on Wall Street provide a positive lead, the AUD is struggling to extend Monday’s rally, possibly due to escalating tensions between China and Australia. The latter lowered tariffs on Australian drought-affected barley exporters, reportedly back to Australia for pushing for a coronavirus probe.
Trade tensions, coupled with comments from the Australian Bureau of Statistics that total paid employment fell 7.3% in the seven weeks leading up to the start of May could put pressure on the Australian dollar during the day ahead.