Daily Commentary BY THE CURVE TEAM –

RBA Minutes in Focus as Rising AUD Complicates the Outlook

16th of July, 2019

Minutes from the RBA’s July Board meeting are due out today and little clarity on the outlook is expected.

After another quiet start to the week, things start to get moving today with the release of the July Board Meeting Minutes from the RBA. As has become the norm, post meeting statements and meeting minutes have given little away in recent times. The Governor has instead used speeches as a platform to flesh out changes to the RBA’s stance on monetary policy.

That isn’t to say that today’s release should be overlooked. At this critical junction in the outlook for monetary policy, any small piece of new information can give us a clue into the RBA’s thinking on where monetary policy is heading.

What will be interesting is whether they will make mention of the currency. While the cash rate setting is one of the biggest influences on overall monetary policy conditions, the currency is also highly influential. As the Fed moves towards cutting rates, the recent softness in the USD has seen the AUD drift higher and is threatening to break out of its recent range.

Any hint from the RBA’s minutes today that they are done cutting for the time being could push the AUD higher. It is currently hovering below 0.7050 and a move up and through this level could see a run higher to 0.72.

A rising currency would complicate the RBA’s outlook as they are relying on a weak currency to support the economy.

David Flanagan

Director - Interest Rate Markets