Aussie dollar shrugs off dovish November RBA minutes
AUD/USD reverses earlier central bank minutes driven loss. EUR/USD continues its advance on mixed EU and US economic data. Sterling wilts ahead of TV debates.
The Australian dollar has put in a strong reversal of earlier losses that were due to surprise dovish comments contained in the minutes of the Reserve Bank of Australia’s (RBA) November interest rate meeting, a transcript of which was released today during the Australasian trading session.
While the RBA left its official rate unchanged at 0.75%, the central bank revealed in the minutes that a strong case could have been made, and that such a move was seriously considered, for a rate cut at the meeting earlier this month. The RBA is generally expected to cut rates by a quarter percentage point sometime in the first quarter of next year.
AUD/USD fell initially by about 75 pips to $0.6770 level on the RBA minutes, but has rallied since, especially as London trading opened. In early New York trade Tuesday, AUD/USD traded as high $0.6835, just shy of the $0.6840 level prevailing before release of the RBA minutes
Mixed EU and US economic data
EUR/USD was continuing to push toward major resistance levels around $1.12, but in midday New York trading was just shy of Monday’s high trade of $1.1090, a minor resistance level that will need to be breached again with momentum if a major breakout of $1.12 is to occur.
US housing start data showed that the housing sector is picking up steam, contributing to overall GDP growth. Starts were up 3.8% last month, in line with expectations. Housing permits, a leading indicator of residential construction, were up a strong 5% to the highest level since just before the housing crash in 2008.
EU new car registrations last month were at the strongest level in twelve years, but the German manufacturers association released a report saying it expected manufacturing in Europe’s largest economy to contract by 4% this year.
Sterling weaker ahead of debates
GBP/USD was slightly weaker midday in New York ahead of televised candidate debates to be held tonight. Sterling has been testing near the key $1.30 resistance level for the past several weeks, trading Tuesday around the $1.2920 level.
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