Forex: AUD/USD – Uptick continues

on Jul 16, 2013
Listen Tuesday July 16th:_ New York trading so far has seen the AUD/USD continue an uptick which started yesterday after the Aussie fell to 0.9033 against the greenback, only to rebound to be at 0.9088 at today’s Asian opening and having since risen to a three-day high at 0.9235.

The Aussie was boosted by comments of the Reserve Bank of Australia during its July meeting and disclosed in the minutes published earlier today. At that meeting the RBA left the official cash rate steady at an historical low of 2.75 percent. The RBA noted with approval the falling aussie’s role in boosting consumer prices and domestic production.

And while it expects inflation to remain within the target range of two to three percent, according to some media interpretations, the RBA has softened its tone on the likelihood of a rate cut at its August meeting.
The RBA’s board stated in the report of the meeting: “The inflation outlook, although slightly higher because of the exchange rate depreciation, could still provide some scope for further easing, should that be required to support demand.” The board also said the Australian dollar could fall further to help the “rebalancing” of the economy away from mining-led growth that the bank has been hoping for since it began cutting interest rates in late 2011.
HSBC chief economist for Australia and New Zealand Paul Bloxham noted that the RBA had thus left the door open for another interest rate cut this year, with his pick being ‘most likely in August’.