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Aussie Mixed After Dovish RBA Minutes, Macroeconomic Data

December 18, 2018 at 10:39 by Vladimir Vyun

Australian coins and banknotesThe Australian dollar was mixed today after the release of monetary policy meeting minutes from the Reserve Bank of Australia and macroeconomic data. The currency rose against few of its major rivals, including the US dollar, but fell against others, like the Japanese yen and the New Zealand dollar.

The RBA released today minutes of its monetary policy meeting that happened on December 4. Markets considered them to be more dovish than before. In particular, analysts focused on uncertainties about prospects for consumers as the central bank said:

The outlook for household consumption continued to be a source of uncertainty because growth in household income remained low, debt levels were high and housing prices had declined. Members noted that this combination of factors posed downside risks.

Nevertheless, RBA members continued to believe that a hike is more likely than a cut to be the next move:

In these circumstances, members continued to agree that the next move in the cash rate was more likely to be an increase than a decrease, but that there was no strong case for a near-term adjustment in monetary policy.

It is important to note that policy makers had expected economic growth in the third quarter of this year to be above 3%, while the report released a day after the meeting showed a 2.8% growth. Therefore, the statement after the next meeting will likely to be even more dovish.

Talking about economic data, reports released at the start of the week were mixed. Released yesterday, the Conference Board Leading Economic Index for Australia fell 0.5% in October following the 0.1% decline in September. Housing Industry Association reported today that New Home Sales increased 3.6% in November after falling 0.8% in October.

AUD/USD advanced from 0.7179 to 0.7199 as of 10:27 GMT today. At the same time, AUD/JPY edged down from 80.96 to 80.88, retreating from the daily high of 81.21. AUD/NZD declined from 1.0547 to 1.0476.

If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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