The Australian dollar rose sharply against the US dollar, pulling up other commodity currencies, including the New Zealand dollar, which collapsed at the beginning of the Asian session on Tuesday after a weak inflation data.
The increase of the Australian dollar occurred after the release of the RBA minutes of the meeting on monetary policy, which includes clear hints that the central bank intends to adhere to a more stringent condition regarding interest rates.
It is expected that the neutral level of the key nominal interest rate will be about 3.5%.
The minutes also indicated that the drop in the unemployment rate removes some of the downside risks to the salary forecast but the labor and housing markets situation still needs to be closely monitored.
Traders took the RBA statement positively which indicated that the economic data for the 2nd quarter was generally positive while a lower Australian dollar helped rebalance the economy.
The demand for the Australian dollar will most likely continue in the medium term, as recently many central banks have announced a review of their policy on interest rate hike.
As for the technical picture of the AUD / USD pair, the output beyond the level of 0.7850 for today's Asian session reached new highs at 0.7980 and 0.8075.
The New Zealand dollar declined at the beginning of the Asian session after the inflation data has been published that disappointed investors.
According to the report of the statistics agency, the New Zealand consumer price index (CPI) was kept unchanged in the second quarter of the year, compared to the first quarter where economists had expected growth of 0.2%.
Compared to the same period in 2016, the CPI grew by 1.7% in the second quarter, while economists expected a larger increase of + 1.95%.
However, the publication of the RBA minutes was supported by the New Zealand dollar and returned to its weekly highs. The breakdown to a massive support range of 0.7365 will lead to the renewal of demand for the trading instrument and could open new highs of 0.7400 and 0.7450
As for the euro, the demand for the currency remains quite high because of investors' reevaluation of their views on Fed's further interest rate hike and prospects for reducing the ECB stimulus program.
