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Currency Market Analysis

Aug 21, 2019 | Currency Market Analysis

Global Themes

Aussie inches higher after RBA signals “hold”

The AUD was mostly higher yesterday after the Reserve Bank of Australia signalled they were currently “on hold” with the RBA keen to see how its June and July back-to-back cuts impact on the Australian economy.

The RBA said it was “appropriate to assess developments in the global and domestic economies before considering further change in the setting of monetary policy”.

The RBA minutes saw bond markets pricing ease back with expectations for rate cuts pushed back slightly. The market now expects two rate cuts by April 2020 (previously the markets expected a second cut by February 2020).

USD weaker

The AUDUSD gained 0.2%.

The pair was helped by a weaker US dollar, which was pressured by a resumption of falls in US bond yields. US sharemarkets were also lower.

The Aussie was mixed in other markets, higher versus the New Zealand dollar, lower versus the British pound and steady versus the euro.

Trump says “cut”

Tonight’s focus is on the US Federal Reserve minutes with markets looking for guidance about the Fed’s next move after they cut rates at its last meeting.

This week, US President Donald Trump said the Fed needs to cut interest rates by 100 basis points “over a fairly short period of time”.

We’ll get further news from global central bankers with the Jackson Hole Symposium due later this week.

By Steven Dooley, Currency Strategist APAC


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