The RBA statement accompanying the July 2nd rate decision leaving the cash rate unchanged at 2.75% cited slowing global economic growth, moderate inflation, historically high commodity prices and worldwide accommodative financial conditions.
The minutes of that meeting due out today at 21:30 (9:30 pm) are unlikely to shed any new light on the thinking of Glenn Stevens and his colleagues. They noted that the Australian Dollar had depreciated "around 10% since early April, though it remains at a high level'" and that further depreciation “would help foster a rebalancing of growth in the economy." Since that statement the Aussie has traded sideways in a 0.9000 to 0.9306 range, the majority of the time between 0.9050 and 0.9200.
The RBA bias is toward an easier monetary policy and with the recent GDP and trade statistics from China that will become more pronounced. It is likely that concerns about Chinese economic growth were expressed at the RBA meeting but unless the editors choose to highlight such comments as a clue to the timing of future rate policy, the minutes will provide scant new information about the course of RBA policy.
The Aussie has managed to hold onto most of the gains of the US session, closing at 0.9098 at the upper end of the day's 0.9036-0.9122 range. Traders still seem disposed to sell rallies but without further damaging information from China or indications from the RBA, a profit taking bounce in the three month 13.5% decline against the US Dollar becomes increasingly possible, though as of yet the Aussie has not established a secure base, touching 0.9000, a likely level for a pause, only once on Friday.
There are some technical offers at the five day moving average at 0.9137, and more at the 14 day moving average at 0.9157. Stronger resistance is at 0.9200, which has only been crossed once since the July 2nd RBA meeting and then only briefly on Thursday with a close beneath at 0.9188.
Chief Market Strategist