Home > Monetary Policy Meeting Minutes to Move the AUD Pairs

Monetary Policy Meeting Minutes to Move the AUD Pairs

July 20, 2020 By Mircea Vasiu

The Australian Dollar (AUD) is one of the currencies favored by investors during the health crisis. After the initial drop in the global financial markets in March, the AUD pairs recovered swiftly, following US equity markets higher. 

One of the reasons for the strong performance is the way the Reserve Bank of Australia (RBA) reacted to the crisis. For the first time in decades, the Australian economy faced recessionary conditions, and many investors feared that the RBA, not used to such a situation, will fail to deliver the proper response.

As it turned out, the RBA over-delivered, as seen in the rise of the AUD pairs.

Important AUD News in the Upcoming Asian Session

The upcoming Asian session has the minutes of the monetary policy meeting of the RBA board. Just like the ECB or the Fed, the RBA publishes the minutes at a constant interval between two scheduled meetings.

Investors and traders look for clues as to what the central bank will do next. Published two weeks after the regular RBA meeting, the minutes are closely watched by any trader with interest in the AUD. Any mismatch with the message delivered by the RBA two weeks ago will translate into increased volatility for the AUD pairs.

Speaking of the AUD pairs, the AUDUSD, once it regained the 0.7 level, did not look back anymore. Helped by the fact that the US stock market hovers around the highs too, it travels in a relatively tight range. As we move closer to the US presidential election in November, the volatility on the stock market will rise, bringing new opportunities for the AUDUSD pair. For the moment, the stability around the 0.7 level reflects investors’ confidence that the RBA monetary policy is suitable enough for the current global economic conditions.

Another AUD pair of interest recently is the EURAUD cross. Events out of Europe hold the headlines as EU leaders struggle to find a common solution for the funds destined for Europe’s recovery. The EURAID pair found strong support in the 1.60 area, a key level moving forward.

If an agreement is reached on the EU Summit in the hours ahead, that is a market positive that creates a broad reaction. Stocks should move higher, triggering another bid behind the AUD pairs.

In other words, the AUD pairs are not only influenced by the RBA’s decisions, but also by the way the global stock market performs. Investors must consider both for the proper decision.