Australian dollar dips, RBA minutes next
The Australian dollar is in negative territory in the Monday session. Currently, the pair is trading at 0.7739, down 0.29% on the day.
The RBA releases the minutes of its March meeting early on Tuesday (00:30 GMT). At the meeting, policymakers maintained the Cash Rate at 0.10%, where it has been pegged since November. The RBA statement pledged that the record low rates would stay in place as long as inflation remained below the target level of 2 to 3 per cent. The statement noted that the current monetary policy is "continuing to help the economy by keeping financing costs very low" and is "contributing to a lower exchange rate than otherwise". The RBA has watched with concern as the Australian dollar has appreciated sharply against the US dollar, with the Aussie punching above the symbolic 80-line earlier in March. The RBA prefers an exchange rate below the 80-level, in order to maintain price stability and protect the critical export sector.
The RBA has been very clear about future monetary policy. At the March meeting, RBA Governor Lowe said that the cash rate is very likely to remain at its current level until at least 2024.” This dovish stance is consistent with the Federal Reserve, which has said it does not plan to raise rates prior to 2023. Lowe wants to see inflation move up to the bank's target of between 2% and 3%, and only then raise rates.
Investors are also keeping an eye on the Federal Reserve, which holds its policy later in the week. The message to the market is expected to be dovish, given that the Fed has said it does not anticipate raising rates before 2023. With the US recovery gaining steam, investors will be particularly interested in the Fed's dot-plot, which is a signal of the Fed's expectations of future interest rate changes.
AUD faces resistance at 0.7832, followed by resistance at 0.7906. On the downside, there is support at 0.7652, with the next support level at 0.7498
The RBA releases the minutes of its March meeting early on Tuesday (00:30 GMT). At the meeting, policymakers maintained the Cash Rate at 0.10%, where it has been pegged since November. The RBA statement pledged that the record low rates would stay in place as long as inflation remained below the target level of 2 to 3 per cent. The statement noted that the current monetary policy is "continuing to help the economy by keeping financing costs very low" and is "contributing to a lower exchange rate than otherwise". The RBA has watched with concern as the Australian dollar has appreciated sharply against the US dollar, with the Aussie punching above the symbolic 80-line earlier in March. The RBA prefers an exchange rate below the 80-level, in order to maintain price stability and protect the critical export sector.
The RBA has been very clear about future monetary policy. At the March meeting, RBA Governor Lowe said that the cash rate is very likely to remain at its current level until at least 2024.” This dovish stance is consistent with the Federal Reserve, which has said it does not plan to raise rates prior to 2023. Lowe wants to see inflation move up to the bank's target of between 2% and 3%, and only then raise rates.
Investors are also keeping an eye on the Federal Reserve, which holds its policy later in the week. The message to the market is expected to be dovish, given that the Fed has said it does not anticipate raising rates before 2023. With the US recovery gaining steam, investors will be particularly interested in the Fed's dot-plot, which is a signal of the Fed's expectations of future interest rate changes.
AUD faces resistance at 0.7832, followed by resistance at 0.7906. On the downside, there is support at 0.7652, with the next support level at 0.7498
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