The Australian dollar is feeling the pressure of RBA once again. This time, it comes from the meeting minutes in addition to Stevens’  heavy comments.
In today’s round, the weakness is most pronounced against the kiwi, as the USD is retreating from the highs.
The meeting minutes from the April decision revealed that the the RBA sees a lower Australian dollar as a help to the economy, and that a further decline is likely given the weak commodity prices.
In addition, they did seriously consider further policy easing in “the period aheadâ€. The board accepted that “easing might be neededâ€. However, they did see an advantage in waiting for more data, including inflation.
We will get quarterly inflation data soon. See how to trade the Australian CPI with AUD/USD.
Regarding commodity prices, they did explicitly talk about iron ore prices and saw them as falling beyond expectations.
For the team at Westpac, the meeting minutes have a very clear message: a rate cut in May. This would set the Aussie interest rate at 2%. Also Citi see a rate cut coming, even though they say the RBA doubts it will be effective.
AUD/USD and AUD/NZD
AUD/USD continued its falls and bottomed out at 0.7680 before rising to 0.7740 at the time of writing. The bounce back can be certainly attributed to the slide in the greenback, that lost ground also against the euro after making nice gains beforehand.
But against the resilient kiwi, the Aussie is less lucky. Here, the chart shows a consistent and gradual decline, sending the cross to 1.0037 and the bounces are very shallow, best described as “dead cat bouncesâ€.
More: AUD/USD to hit 0.69 by year end – Morgan Stanley
