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Aussie Approaches 0.94 US ahead of RBA Meeting Minutes

H.S. Borji
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Aussie Approaches 0.94 US ahead of RBA Meeting Minutes

The Australian dollar advanced slightly against its US counterpart Monday amid a dearth of economic data, as investors remained on the sidelines ahead of Tuesday’s RBA meeting minutes.

The AUDUSD traded within a narrow range of 0.9380-0.9403. The pair consolidated at 0.9394, advancing 0.11 percent. The technical levels show in initial support at 0.9374 and resistance at 0.9410.

Meanwhile, the Aussie advanced against the Japanese yen. The AUDJPY climbed 0.28 percent to 95.41. The pair faces initial support at 94.95 and resistance at 95.56.

The Aussie rebounded against the New Zealand dollar after a volatile month of July saw the pair tumble 1.5 percent. The AUDNZD climbed 0.22 percent to 1.0669.

On Tuesday the Reserve Bank of Australia will release the minutes of its July 1 policy meetings. The RBA held its benchmark lending rate at 2.5 percent for the eleventh consecutive month as policymakers sought a “period of stability” to achieve balanced economic growth.

At the same time, borrowing costs are expected to remain low for a prolonged period as the economy recovers from a slowdown in mining investment.

A dovish reading of the July 1 meeting minutes is expected to weigh on the Australian dollar, which has been talked down in recent weeks by RBA Governor Glenn Stevens.

Speaking at the Australian Meeting of the International Economic Society earlier this month, Stevens cautioned the markets about the historically high exchange rate of the Australian dollar.

Recent economic data are unlikely to create a shift in RBA rhetoric. Last week the Australian Bureau of Statistics said employment levels increased 15,900 in June, although full-time employment declined 3,800.

The unemployment rate edged up from 5.9 percent to 6 percent. The Australian government expects the unemployment rate to rise to 6.25 percent.

The prediction was announced in the latest Commonwealth budget, which has been described as the “toughest” in nearly two decades. The government expects economic growth to be lower than in the previous two years amid waning private investment.

In economic data, the Australian Bureau of Statistics will report on new vehicle sales Tuesday.

On Wednesday the Melbourne Institute will release its leading index, which tracks several components of the Australian economy.

On Thursday the National Australia Bank will release its quarterly business confidence survey, which provides a short-term outlook of the Australian economy.

The Conference Board will also release its leading indicator for the month of May, which tracks future trends in the Australian economy.

Chinese data will also play a role in pricing the Aussie this week. On Tuesday the
Chinese government will report on foreign direct investment, foreign exchange reserves and consumer and business loans.

On Wednesday China will report on second quarter GDP, industrial production, retail sales and urban investment.

China’s economy is forecast to have expanded 7.4 percent annually in the second quarter.

Industrial production is forecast to have increased 9 percent annually in June.
Retail sales advanced 12.4 percent annually, forecasters say.

Urban investment is expected to have increased at an annual rate of 17.2 percent in June.

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