AUD/USD pulls back from the monthly-high (0.7337) as the Reserve Bank of Australia (RBA) Minutes does little to sway the monetary policy outlook, and the advance from the 2018-low (0.7021) may continue to unravel as the exchange rate extends the series of lower highs & lows from earlier this week.
AUD/USD RATE CARVES BEARISH SERIES FOLLOWING LACKLUSTER RBA MINUTES
AUD/USD struggles to hold its ground even as the RBA transcript states that ‘the next move in the cash rate was more likely to be an increase than a decrease’ as the central bank appears to be in no rush to lift the official cash rate (OCR) off of the record-low.
It seems as though the RBA will continue to run the clock at the next meeting on December 4 as officials reiterate that ‘there was no strong case for a near-term adjustment in monetary policy,’ and Governor Philip Lowe & Co. may continue to tame bets for higher borrowing costs as ‘members noted that there continued to be uncertainty about the degree of spare capacity in the labor market and the extent and speed of any pick-up in wages growth relative to the gradual increase incorporated in the latest forecasts.’
With that said, the RBA appears to be bracing for further depreciation in AUD/USD as ‘changes in the expected paths of monetary policy over the preceding year had been reflected in changes to financial market pricing, most notably a broad-based appreciation of the US dollar,’ and the growing interest rate differential may continue to drag on the exchange rate in 2018 especially as the Federal Open Market Committee (FOMC) shows little to no interest in abandoning the hiking-cycle.
Keep in mind, the upcoming U.S. holiday is likely to give way to thin market conditions as participation wanes ahead of the weekend, but the recent pullback in AUD/USD appears to be spurring a bit of crowding behavior as retail traders remain net-long aussie-dollar.
