Australian Dollar’s Relief Rally Ends With the Latest RBA Meeting Minutes

(This is an excerpt from an article I originally published on Seeking Alpha on August 20, 2013. Click here to read the entire piece.)

It was fun while it lasted. The anticipated relief rally in the Australian dollar (FXA) seems to have ended in parallel with the release of the meeting minutes from the last monetary policy meeting of the Reserve Bank of Australia (RBA). {snip}


The euro could not hold its primary trend but the even more important 50DMA held up fine
The euro could not hold its primary trend but the even more important 50DMA held up fine

THe British pound maintains a strong upward trend against the Australian dollar
THe British pound maintains a strong upward trend against the Australian dollar
The Japanese yen is providing even stiffer resistance against relief rallies in the Australian dollar
The Japanese yen is providing even stiffer resistance against relief rallies in the Australian dollar

For a quick minute, it looked like the Australian dollar might actually break free of resistance and rally further against the U.S. dollar
For a quick minute, it looked like the Australian dollar might actually break free of resistance and rally further against the U.S. dollar

Source for charts: FreeStockCharts.com

Here are the nuggets I found of greatest interest from the minutes. I follow each one with my own editorial.

{snip}

“At recent meetings the Board had held the cash rate steady, but had judged that the inflation outlook might afford some scope to ease policy further, should that be necessary to support demand. The forecasts for this meeting suggested no lessening of that scope, but did show a weaker outlook for activity overall. The course of the exchange rate would be important. It had declined since the previous meeting, though remained high by historical standards. It was possible the exchange rate would decline further over time, which would assist in rebalancing growth in the economy, though it would also be affected by developments in other countries.”

This statement is probably as close the RBA will come to saying that it will keep lowering interest rates until the exchange rate gets down to an agreeable level. While I simply cannot see how even lower rates can be justified from here, I suppose anything is possible when major trading partners continue to pursue zero interest rate policies. Regardless, this statement is also enough to get me to switch back to a bearish bias on the Australian dollar, thus ending my ride on the relief rally.

{snip}

Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on August 20, 2013. Click here to read the entire piece.)

Full disclosure: net short Australian dollar

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