+357 25 105 641
Australian dollar down after minutes
Published on 16.05.2017 07:29

The Australian dollar is under pressure late in the Asian session today after the release of the minutes meeting from the Reserve Bank of Australia where they raised a number of concerns.

At 3.03pm (AEDT) the Aussie dollar was trading at US74.08c down from US74.14c in yesterday’s trading.

In their latest minutes meeting, the RBA noted that, they were still concerned about the rising property prices in Australia and the level of household debt that is also creeping up.

On the other hand, the central bank noted that unemployment rate was climbing and now currently sits at its highest rate in over a year, which raises the question, will interest rates increase or decrease in the nearest future?

If the RBA goes ahead and cuts rates it may help the jobless rate as companies borrow to expand business but it may further inflame the already overheated housing market which is at record levels and is already seen by many as unsustainable..

A hike in rates will have the opposite effect so they are faced with a big dilemma on the question of monetary policy.

It seems at this stage the RBA will just sit on the sidelines for much longer than expected and leave rates unchanged which will add further pressure to the Australian dollar against the greenback as the US gears up to raise rates further, which will narrow the interest rate gap between the two countries.,

"The market has the second of three Fed interest rate hikes penciled in for June and for the frequency of Fed rate hikes in 2018 to decrease. If that were to increase, it would be another reason to sell AUD/USD." said David Forrester, a foreign-exchange strategist at Credit Agricole.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

The world of trading has no boundaries
×

Risk warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, your level of experience and preparation of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.

Important notice
By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Click "Cancel" to remain on this page.