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AUD/USD slips to fresh 5.5-month low after RBA minutes

  • The AUD is being offered across the board on dovish RBA minutes.  
  • The Aussie house price index falls more than expected.  
  • AUD/USD slips to lowest since January 3.

The AUD/USD fell to fresh 5.5-month lows after the minutes of the Reserve Bank of Australia’s June rate decision showed consensus among policymakers that further monetary easing would be appropriate.  

The currency pair is currently trading at 0.6841, the lowest level since January 6. Notably, the Aussie dollar is down for the first straight session and has dropped on five out of the last six trading days.  

Monetary  policy  board agreed that further policy easing would be appropriate and factors limiting inflation, particularly wage growth, are expected to last for some time, the minutes said.  

As of writing,  the market is pricing-in a rate-cut from the RBA by August and another rate cut for December is almost priced in.  With the minutes sounding dovish, the markets may begin pricing  the possibility of RBA cutting rates in July. As a result, the AUD/USD pair will likely remain on the defensive during the day ahead – more so, as the Aussie house price index fell 3% quarter-on-quarter in the first quarter compared to -2.6% expected.  

It is worth noting that the central bank cut rates by 25 basis points to a new record low of 1.25% earlier this month.  

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