The Australian dollar has started the week in negative territory and fallen below the 0.74 line. Currently, AUD/USD is trading at 0.7345, down 0.74% on the day.
The Aussie isn’t getting much love from the markets lately, and the current downswing could continue this week. AUD/USD fell to a low of 0.7343 earlier in the day, its lowest level since November 2020. Traditionally, July is one the best months for the Australian dollar, but so far, the currency is down 2.04% in July.
Investors are keeping a close eye on the RBA minutes from the July meeting, which will be released on Tuesday (1:30 GMT). The RBA has been consistent and clear in its message to the markets, which has been largely dovish, even with a taper of the QE programme. At the meeting, the bank stated that it will maintain its stimulus programme until headline inflation rises to the bank’s target band of 2-3%. Given that the figure in Q1 was only 1.1%, it appears that stimulus is here to stay for quite some time.
At the policy meeting on July 6, the RBA announced that it would reduce QE purchases from AUD 5 billion per week to 4 billion per week as of September, with this move to be reassessed in November. Still, the RBA’s forward guidance remained dovish, with policymakers saying that conditions were unlikely to warrant a rate hike prior to 2024. The Aussie moved higher after the RBA meeting, but then retreated and has been on a downswing for much of the time since the meeting.
If the minutes are essentially a repeat of the rate statement and follow-up comments from RBA Governor Lowe, then we could see some slight easing from the Australian dollar.
- AUD/USD is down sharply and is testing 0.7358. Below, there is support at 0.7319
- On the upside, there is resistance at 0.7469 and 0.7541
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