Many traders are eager to see if tonight’s minutes will show that the Reserve Bank of Australia is hesitant in providing an additional rate cut. The lack of guidance for a future rate cut this month has helped provide a boost for Aussie dollar and the yield on Australian government bonds.
Last night, Australian new motor vehicle sales declined by 3.5% in July, a significant decline from the prior month’s gain of 3.6%. The FX market did not have a major reaction.
If the RBA remains to having a more wait and see monetary policy approach, in the short term the Australian currency may rally. Upside however could be constrained as bigger concerns are growing in China. If house prices do not slow down or if they have a strong correction, economic growth may be weakened. Chinese house prices climbed 6.7% year over year in July because of strong domestic demand.
For tonight, key resistance remains .9300 while support falls around the .9100 level.