The minutes of the RBA’s policy meeting on April 9 was released today, revealing the board’s optimistic outlook on the economy. Although there is a slight hint of downplaying the Aussie dollar, we are yet to see a tough jawboning from Governor Glenn Stevens to balance the AUD’s surging value and the target inflation rate.
“Members noted that an appreciating exchange rate could complicate progress in activity rebalancing towards the non-mining sectors of the economy,” the RBA said.
A continuous increase in commodity prices can cushion the blow of an ‘overvalued’ AUD. After sliding several pips leading to the minutes’ release, the pair reached a 10-month high of 0.7779. The recovery of oil prices also helped the currency regain losses.
On the flipside, a snap election in July was confirmed by Prime Minister Malcolm Turnbull earlier today, casting a shadow on the AUD’s uptrend against the USD.
Meanwhile, Boston Fed president Eric Rosengren dismissed pessimistic investors, saying that the Fed is likely to raise the rates due to a modest increase in wages. In his speech, Rosengren’s deviates from his usually dovish stance, adding that “rate increases are absolutely appropriate.”
The pair is drifting just below 78 cents. The exchange rate is currently at 0.7778.