AUD/USD: Pops higher on RBA minutes scattered with hawkish tinges
The hawkish tone of the RBA’s October monetary policy minutes has caught markets by surprise, seeing the AUD pop higher against the USD and crosses.
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Communication has been a problem for the RBA for a while, resulting in a loss of institutional reputation and replacement of former Governor Philip Lowe. But old habits are hard to break. While the RBA has a new Governor in Michele Bullock, the same issues continue to crop up time and again.
The tone of the RBA’s October monetary policy minutes relative to the policy statement released two weeks earlier is yet another example of the bank’s communication challenges, presenting a far more hawkish assessment on the rates outlook which has caught markets off-guard.
Here’s a snapshot from Refinitiv showing the hot headlines from the RBA minutes, with the highlighted sections the areas that caught my eye as being particularly hawkish.
Source: Refinitiv
The line about “significant concern” relating to upside inflation risks is particularly noteworthy, suggesting the next quarterly inflation report due next week will play a crucial role in determining whether the RBA will re-start its tightening cycle.
AUD pops higher on hawkish notes
AUD/USD and other AUD pairs have popped higher on the back of the minutes, adding to the decent bounce seen on Monday. However, given the minutes are dated with an escalation in geopolitical risks since the RBA Board last met, the impact could easily fade as quickly as it arrived.
For AUD/USD, support is located around .6343 and again around .6315. On the topside, minor resistance may be found around .6380 more substantial offers arriving above .6395.
-- Written by David Scutt
Follow David on Twitter @scutty
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