The Reserve Bank of Australia left the interest rate unchanged at 1.50% as widely expected. And also the accompanying statement seems somewhat unchanged.
While they do mention that a stronger A$ could complicate matters, this is the same text that we have seen beforehand.
Among the positive notes: the economy is doing OK and stronger global growth is helping as well. Commodity prices are higher and this boosts the national income. The transition away from mining continues.
Among the worries: in some areas, housing prices are rising “briskly” and this is eyed for financial stability. Low wage growth is certainly a worry.
All in all, the positives and the negatives are not new at all.
The Australian dollar is trading higher: it jumped to 0.7632 and after calming down, it holds on above the 0.7610 line that was the bottom of the previous range: 0.7610 to 0.77. Lower support awaits at the round level of 0.75.
Were markets expecting hints of a rate cut sometime later in the year? Perhaps in 2018?
In any case, we are back to the previous higher range. The pair dropped to the 0.76 handle on the Fed’s hawkishness.
Here is how it looks on the Aussie/USD chart:
More: AUD: ‘More Confidence’ Next Move Is Up But No Change In Rhetoric This Week – BofA Merrill
Chinese Reserves Rise
Later in the day, we received news from China: Australia’s No. 1 trading partner reported a rise in foreign exchange reserve, that now top 3 trillion USD. A stronger China is also good news for Australia.
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