Tuesday, July 19, 2016

Australian dollar has posted sharp losses on Tuesday

The Australian dollar has posted sharp losses on Tuesday, as AUD/USD has dropped below the 0.75 level. In economic news, the RBA minutes pointed to a dovish stance by the central bank regarding a rate cut in the near future. Later in the day, Australia releases the MI Leading Index. In the US, we’ll get a look at construction data, with the release of Building Permits and Housing Starts. Neither indicator is expected to show much change in the June reports.
The RBA published its minutes from its July policy meeting, indicating that there was more room to lower rates, given low inflation levels. However, the minutes added that a monetary move by the bank would be data-dependent. In other words, if inflation and other key indicators show improvement, there will be less pressure on the bank to cut rates in order to boost inflation and bolster economic growth. The RBA caught the markets flat-footed in May, when it lowered rates from 2.00% to 1.75% in response to a dismal CPI release in the first quarter of -0.2%. The next CPI release is due on July 27, and another weak reading could be a sign that the RBA will again lower interest rates in order to boost economic growth.