AUD/USD: Australian dollar in consolidation after RBA minutes

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Jun 15, 2021
  • The AUD/USD is in a tight range after the RBA minutes.
  • The members said that the Australian dollar was still rangebound.
  • The pair will next react to the latest Fed decision.

The AUD/USD retreated after the latest Reserve Bank of Australia (RBA) minutes. The pair dropped to 0.7700, which was lower than last Friday’s high of 0.7725.

Australian dollar
Australian dollar chart

RBA minutes

Last week, the RBA concluded its two-day meeting. As most analysts were expecting, the bank decided to leave interest rates and its quantitative easing policies unchanged. The bank indicated that the accommodative policy was needed to support the country’s economy as it emerges from the pandemic.

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The RBA published the minutes of these minutes on Tuesday. The report showed that the members of the committee were in agreement that the accommodative policy was necessary even after the recent strong numbers. 

The bank also put in place the conditions for its longer-dated bond purchases. These options include ceasing the purchases of bonds in September or launching another $77 billion program for six months. The other option is for scaling back the amount of funds purchased or spreading the purchases over a long period.

In the statement, the bank said that the Australian dollar was still rangebound, even after rising by 40% since the pandemic started. 

The AUD/USD also reacted to the latest Australian house price index (HPI). The data showed that the HPI rose by 5.4% in the first quarter after it rose by 3.0% in the previous quarter. This increase was relatively lower than the median estimate of 5.5%. Indeed, according to media reports, houses in Australia are selling at some of their highest levels in years.

US retail sales and Australian jobs data

Looking ahead, the AUD/USD will react to the latest US retail sales and producer price index (PPI) data that will come out today. In total, US retail sales are expected to record a slowdown as the impact of the $1.9 trillion stimulus starts to fade. Also, the producer price index (PPI) is expected to keep rising helped by the strong commodity prices.

The biggest catalyst for the Australian dollar this week will be the Fed interest rate decision that will come out tomorrow. Like the RBA, the Fed is expected to leave interest rates unchanged. Later this week, the Australian Bureau of Statistics will publish the latest jobs data. 

AUD/USD technical analysis

AUD/USD
AUD/USD technical chart

On the daily chart, we see that the AUD/USD pair has been in a consolidation phase. This has seen it trade along the 25-day and 50-day exponential moving averages (EMA). The Average True Range (ATR) has declined, meaning that its volatility has declined. As such, there is a possibility that the pair will soon break out.

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