- AUD/USD trades at 0.7595, the highest level in four weeks.
- The RBA minutes warn against early scaling back of monetary stimulus.
- RBA’s dovish stance priced in, commodity rally underpins AUD demand.
The AUD/USD pair remains bid at one-month highs even as minutes of the Reserve Bank of Australia’s (RBA) February meeting call for continued monetary stimulus.
The policymakers concluded that the economy needed very significant monetary policy support for some time, and a premature withdrawal of stimulus would put upward pressure on the AUD.
Key quotes
- Cash rate (benchmark interest rate) to be kept at ten bps as long as is necessary.
- The RBA will not raise the cash rate until inflation sustainably in 2-3% target band
- The bank does not expect to reach targets for unemployment, inflation until 2024 at the earliest.
- There were few signs of deterioration in lending standards to be closely monitored in the period ahead.
- Important how households, firms adjust to some fiscal tapering.
- Concluded more financial stability benefits from stronger economy, very significant monetary support required for some time.
That the RBA is likely to keep the policy accommodative for a prolonged period is generally accepted by now and priced in. Hence, the dovish tone of the minutes released at 00:30 has failed to draw offers for the Aussie dollar.
The AUD/USD pair is trading near 0.7795 at press time, representing a 0.20% gain on the day. That’s the highest level since Jan. 14.
The Aussie dollar found dip demand near 0.7565 on Feb. 2 and has been rising ever since, courtesy of the US fiscal stimulus expectations weighing over the USD and rising commodity prices.
According to prominent investment banks, a new commodity super-cycle is now firmly underway, with copper and other industrial metals hitting the highest in years and oil trading well above $50 per barrel. The AUD is sensitive to changes in commodity prices as Australia exports copper, iron ore, and other metals.
Technical levels
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