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In its minutes of April meeting, released today, Reserve Bank of Australia (RBA) has introduced a four letter word that has been driving Aussie since the morning. Australian Dollar, traded 0.78 against Dollar today, a level not seen since June last year.
Since bottoming around 0.68 against Dollar, in January this year, Aussie has rallied around 1000 pips riding on weaker Dollar (lower hike expectations from FED), additional easing from Bank of Japan (BOJ) and European Central Bank (ECB) fuelling risk aversion, China’s fiscal stimulus and rebound in commodities such as iron ore, its main export.
Today’s minutes included a particular line…” ……..members assessed that it was appropriate for monetary policy to be very accommodative.” That has been buzzing in the financial media. It probably means that current stance of 2% interest rates sufficient enough to provide required accommodation unless further shocks hit global economy such as China hard landing.
Based on previous monetary policy statement we assessed that RBA would stand pat at least till third quarter, after today’s wordings we increase that time line to fourth quarter or best to say, till the next turmoil.
Aussie is currently trading at 0.779 against Dollar. Key resistance lies at 0.79 and 0.81 area.
