Forex - AUD/USD, AUD/JPY Flows: Weighed by RBA minutes which showed a cut is likelier than market had expected


 01:28 (GMT) 19 Nov

  [Forex Flows]   [Central Banks]

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AUD/USD, AUD/JPY Flows: Weighed by RBA minutes which showed a cut is likelier than market had expected (0101-PSZJ-C01)

AUD/USD slipping lower following RBA minutes which showed that the decision to pause in its November meeting was not as clear-cut as market had expected. A cut was considered during that meeting, though eventually did not pull the trigger in view of detrimental effects on household confidence amid rapid rate cuts.
The RBA is unlikely to cut rate again in December as it might spook household but a rate cut next year would likely have a less detrimental impact and market is repricing that in again. Now a cut in February looks to be the majority view, in line with our call.
AUD/USD broke below 0.68 before seeing a bounce from 0.6785. Combine the RBA minutes and a more cautious tone on US-China trade, a recovery in AUD might be hard. USD has been undermined by less positive trade headlines and the Trump-Powell meeting, so weakness in AUD/USD might be less pronounced as compared to crosses.
AUD/JPY dipped on the minutes but once again supported by its 100dma but should still hold without further signs of a trade deal breaking down.


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