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Aussie Holds Support

The Australian Dollar is trading slightly firmer today on the back of the latest RBA minutes, released overnight, holding at a key support level for now. The minutes showed that the bank deliberated over whether to keep rates on hold or hike by a further .25%. While the case for holding was stronger at the time, members agreed that further tightening could not be ruled out with policymakers prepared to keep rates in restrictive territory for as long as needed to ensure inflation travels back down to target.
 

Mixed Domestic Economy

In terms of the domestic economy, policymakers noted mixed conditions with goods inflation seen falling faster than expected while services inflation remained higher. The labor market was still seen as relatively tight though wage growth was noted to have fallen in some sectors, similarly, financial conditions were seen as restrictive in some areas and less so in others. Looking ahead, the board projects inflation back at target by 2025 and assumes no further hikes.
 

Bullish Risks Remains

In all, the minutes essentially show that the RBA is not expecting to have to tighten again but stands ready to do so if necessary. With this in mind, AUD is likely to remain supported for now given the risks of fresh tightening should we see any uptick in inflation in the coming months.
 

Technical Views

AUDUSD

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The sell off in the Aussie has stalled for now into a test of the .6520 area and the broken bear trend line. With momentum studies climbing, focus is on a fresh push higher while price holds at this level. Next level for bulls to focus on will be .6681. To the downside, .6275 is next support should we break lower again. 

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