The Australian dollar is trading lower against most of its major counterparts early on in today’s session following the release of the Reserve Bank of Australia (RBA) meeting minutes. AUDUSD slipped below support at the 0.6800 handle to trade around 0.6790. Meanwhile, AUDNZD fell over 15 pips to trade around 1.0620.
In their last meeting, the central bank announced that interest rates would remain at record-lows at 0.75%. Policymakers also reiterated that although they see inflation within the lower bound of their 2% target, they are ready to act if they deem necessary.
The minutes revealed that the board considered cutting rates in their November meeting. It minutes revealed that a “case could be made” for slashing rates to new record lows at that point. However, the RBA stood pat (and will continue to) until they could make a “full assessment” of the effects of their prior monetary policy decisions.
This had a bearish effect on the Aussie especially since these sentiments were made before last week’s employment data sorely missed expectations. There are speculations that the central bank may soon cut rates to 0.50% if domestic conditions continue to show weakness.
AUDUSD fell from resistance at the 200 SMA, previous lows, and 38.2% Fib level (from the high of November 6 to the low of November 14). There’s a little more room for the currency pair to move lower with the next support level being at 0.6768 where it bottomed on November 14. If sellers are able to clear this level, the next support will be around 0.6723 where AUDUSD found support in October 16.
Alternatively, market participants may realize that the RBA minutes do not reveal anything new to central bank’s stance. If there are enough buyers in today’s trading, AUDUSD could retest resistance at the 200 SMA and 38.2% Fib level. The next level to watch out for will be 0.6857 where there is a confluence of resistance from: 100 SMA, 61.8% Fib level, and previous trend line.Download our latest quarterly market outlook for our longer-term trade ideas.