FX News – December 17: AUD/USD Higher Post-RBA Minutes

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Australia earlier released the Minutes of the Reserve Bank's Monetary Policy Meeting. It's no surprise that the members continue to see the aussie as overvalued.

According to the minutes: "While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy."

Aside from the overvalued aussie, there were other issues mentioned too, including the possibility of further rate cuts.

"The Board's judgment remained that, given the substantial degree of policy stimulus that had been imparted, it was prudent to hold the cash rate steady while continuing to gauge the effects of earlier reductions, but not to close off the possibility of reducing it further should that be appropriate to support sustainable growth in economic activity, consistent with the inflation target."

The statement helped lift the AUD/USD pair early in today's session, but it remained within the range it has been since this weekend. The pair is currently trading at 0.8952, with initial resistance seen at 0.8993, followed by 0.9015. Meanwhile, initial support is at 0.8934, followed by 0.8912.

While Australia's economy has somehow been struggling, its neighbour New Zealand has more positive news on its economy. For one, it raised it budget surplus in 2014/15 as well as for 2015/16, where it is now at NZD1.7 billion. Meanwhile, the country sees its GDP peaking at 3.6% in 2015. In addition, the country also revealed plans on repaying its debt earlier than expected, and that the RBNZ would probably raise rates by next year.

Like the AUD/USD pair, the AUD/NZD pair has been on a downtrend, although it had some respite after the release of the RBA's Minutes of its Monetary Policy Meeting. It is currently trading at 1.0818, with initial resistance at 1.0904, followed by 1.0931. Meanwhile, initial support is at 1.0828, followed by 1.0801.

By FX Strategy Team, Published on 17th of December 2013
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