AUD/USD: possibility of RBA interest rate hike


The Australian dollar strengthened after today's publication of the minutes of the July meeting of the RBA, and the pair AUD / USD rose to an intraday and 12-day high of 0.6898, coming close to the resistance level 0.6900.

The minutes of the RBA's July monetary policy meeting released this morning indicated that "further steps need to be taken in the coming months to normalize monetary conditions in Australia". “The level of interest rates is still very low for an economy with high labor market demand and facing a period of high inflation,” and “CB members considered raising interest rates by 25 basis points or 50 basis points,” the minutes said. For inflation to return to the target level, "over time, a further increase in the interest rate will be required."

Well, since inflationary pressure in Australia has an upward character, economists also expect the RBA to continue its active tightening. Now market participants are pricing in the probability that the RBA will again raise interest rates by 0.50% or even 0.75% at the August meeting.

The next meeting of the RBA will take place on August 2, and in the coming days, market participants who follow the dynamics of the AUD will pay attention to today's (at 23:10 GMT) speech by RBA head Philip Lowe (market participants would also like to hear from Lowe's opinion on the prospects for the policy of the central bank after raising interest rates in July. Any signals from him regarding a change in the monetary policy plans of the RBA will cause a sharp increase in volatility in the AUD) and on the publication tomorrow and Thursday of important economic indicators for Australia: on Wednesday at the beginning of the trading day and on Thursday at 01:30, 22:00, 23:00 (GMT).

In addition, market volatility, which will also affect the dynamics of AUD / USD, will increase this week on Thursday at 03:00, 12:15, 12:45, when the meetings of the central banks of Japan and the Eurozone take place.