Aussie falls ahead of RBA minutes

The Australian dollar is trading at $0.915, down 0.4% against the US dollar ahead of Tuesday’s release of the Reserve Bank of Australia rate-meeting minutes.

The RBA cut Australian interest rates to 2.5% at the start of the month, an all-time low, and AUD/USD traders will be particularly interested to assess the minutes for hints as to future direction. The Australian economy is adjusting to life after the mining boom, and so by lowering rates the RBA are aiming to encourage domestic business.

Overnight, Australia announced a decline in new motor vehicle sales of 3.5% in July, compared with an increase of 3.6% in June, highlighting the fall in consumer demand. If the minutes suggest there could be a further rate cut this side of Christmas, the Australian dollar may fall further.

On Wednesday the US Federal Reserve releases its latest minutes. As we approach September there is a growing belief the Fed will tapering its bond-buying programme. If there any hints that tapering will begin soon we could see the Australian dollar drop below the $0.9 mark.

Spot FX AUD/USD (DFB) chart

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