The USD started the week on a weak note as the new month began, dropping on the lackluster ISM manufacturing data but recovering quickly yesterday. The AUD, on the other hand, has benefited from the positive risk sentiment, as well as due to the support from a more hawkish RBA stance. Today we received the minutes from the last Reserve bank of Australia meeting.

AUD/USD Chart Daily – MAs Keeping the Price Confined

Last week, the Australian dollar gained momentum from strong monthly CPI data, raising the likelihood of a rate hike. However, RBA Governor Hauser tempered expectations, expressing a preference for maintaining rates steady for a longer duration, which continues to leave AUD/USD in the 1-cent range.

Reserve Bank of Australia Meeting Minutes

• RBA June meeting minutes highlight a stronger case for holding rates steady than for hiking.
• Vigilance required for upside risks to inflation; May CPI data suggested potential risks.
• Economic uncertainty makes future policy changes difficult to predict.
• Recent data insufficient to alter inflation outlook, targeting a return to 2-3% by 2026.
• Possibility to manage inflation while maintaining employment gains.
• Board noted downside risks to the labor market and weak vacancy rates.
• Unemployment could rise quickly, as in previous instances.
• Rapid rise in business insolvencies could negatively impact jobs.
• Cautioned against overemphasizing upward revisions to household consumption.
• Q1 GDP growth was very weak; wage growth appears to have peaked.
• Future rate hikes might be necessary if current policy is deemed insufficiently restrictive.
• August forecast round to assess spare capacity in the economy.
• Judgements about economic spare capacity remain highly uncertain.
• Inflation expectations still anchored, but market premia have increased.
• A significant rise in inflation expectations might necessitate considerably higher rates.

AUD/USD Live Chart