After slipping below the US$0.68 handle overnight, the Australian dollar was edging higher in early trade on Tuesday. At the time of writing the pair is 0.2% higher on the day, hovering around US$0.6825.
The Australian dollar was the biggest G10 mover overnight, dipping in the Asian session following dovish policy remarks from the Reserve Bank of Australia.
The minutes from the latest RBA monetary meeting showed that the central bank was still very ready to cut interest rates from their current lows if necessary. The meeting on November 4th saw the RBA keep interest rates on hold at 0.75%. However, the minutes show that the central bank still sees a case for cutting rates lower. Investors had assumed that the RBA would not cut rates again this year. However, the minutes show that a fourth rate cut could be planned for this year at the 3rd December meeting. The prospect of lower interest rates sent the Aussie dollar southwards overnight, although it has since recovered lost ground on improved risk sentiment.
Looking ahead there is no high impacting Australian economic data due to be released later today. Investors will remain focused on trade war headlines, which continue to be contradictory.
Dollar Investors Look Ahead To FOMC Minutes
The dollar is trading quietly on Tuesday owing to an absence of influential economic data and fewer trade headlines. Scepticism remains as to whether the US and China will agree to a phase one trade deal soon.
Investors are now looking ahead to the minutes to the Federal Reserve monetary policy meeting the FOMC, which will be released tomorrow. This was the meeting in which the Fed decided to end the current cutting cycle, after three “insurance” cuts.
Federal Reserve Chair Jerome Powell gave a testimony to Congress last week. He gave an upbeat assessment on the US economy. However, he also was clear that he considered that policy was appropriate. The dollar dipped as any optimism over a rate hike was swiftly wiped away. Should he minutes continue with the rhetoric that policy is appropriate the dollar could edge lower.
|What do these figures mean?|
|When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written:
1 USD = 0.6784 AUD
Here, $1 is equivalent to approximately A$0.67. This specifically measures the US dollar’s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it’s positive for the US dollar.
Or, if you were looking at it the other way around:
1 AUD = 1.4739 USD
In this example, A$1 is equivalent to approximately $1.47. This measures the Australian dollar’s worth versus the US Dollar. If the US dollar number gets larger, it’s good news for the Aussie dollar.