RBA minutes: Board prepared to ease  policy further if needed (AUD lower)

The minutes from the RBA Board’s 5th November meeting have been released which shows the RBA has an easing bias.  AUD/USD is lower on the minutes, down -0.20% at the time of writing.  

• Bored prepared to ease  policy further if needed and case could be made for a rate cut at November meeting.

More to come…

There is some an element of  surprise there considering that this is more dovish than what the central bank’s  Statement on Monetary Policy which went as follows:  “The Board was mindful that rates were already very low and that each further cut brings closer the point at which other policy options come into play”.

FX implications:

We had already seen a very lengthy quarterly statement but  markets that are already  somewhat positioned with the potential of further rate cuts ahead are likely to be cheering such rhetoric as this. Prior to the minutes,  “markets were  pricing a 20% chance of easing at the Dec RBA meeting, and a terminal rate of 0.50% (RBA cash rate currently at 0.75%),” analysts at Westpac noted.  

Technically, AUD/USD has been capped by the vicinity of the 200-day moving average at the start of this month. AUD/USD is  respecting the descending trend line  resistance  at this juncture. To the downside, the  0.6730s guard prospects of a test to the YTD lows in the 0.6660s before the 0.65 handle. On the upside, a  break of the 200-DMA opens risk to the  0.7020s which meets the 23.6% Fibonacci retracement level of the 2018 highs to July 2019 lows.