The AUD/USD pair actually ignored the minutes of the last RBA meeting, which was published during the Asian session on Tuesday. In cross-pairs, the Australian dollar reacted negatively to this release, albeit limited. In general, the published document did not contain anything new – the main rhetoric have already been reflected following the June meeting of the RBA.
For the current week, this instrument is trading in a narrow price range, waiting for the verdict of the US Federal Reserve System. It can be recalled that the Fed will sum up the results of its next meeting tomorrow, June 16. Therefore, traders of dollar pairs are not in a rush to open large positions. The AUD/USD is no exception here.
In general, the Australian dollar has not managed to leave the area of the 0.77 mark for a month. Both buyers and sellers of the pair repeatedly made corresponding attempts, but they returned each time. For example, traders tested the borders of the 78th figure for one day (June 11) and saw themselves in the area of the level of 0.76. Nevertheless, the previous trading day (and week) closed at 0.7708. There were similar price fluctuations since May 13: the AUD regularly tests the borders of the range, but can not decide on the vector of its movement.
Going back to the RBA minutes published today, it should be noted that the June meeting turned out to be a check-through. The Reserve Bank of Australia kept its key interest rate at a record low of 0.10%. They also left the target level of the yield on 3-year government bonds at the same level (0.10%), as well as left the parameters of the current government bond purchase program unchanged. RBA members stated once again that the rate level will not be raised until the actual inflation steadily settles in the target range of 2-3%. According to representatives of the Central Bank, this is unlikely to happen before 2024.
At the same time, the Australian regulator directly stated that key decisions will be made at the July meeting. In an accompanying statement, the Central Bank indicated in a separate line that the Reserve Bank will consider in July whether to maintain the yield of 3-year bonds maturing in April 2024 as a target or switch to securities with an expiration date on November 24. Most importantly, the RBA will consider further bond purchases at its July meeting.
The minutes of the June meeting did not reveal any new details. The members of the regulator agreed that it is currently early to consider the termination of the bond purchase program. According to the RBA, monetary policy should remain "highly adaptive" to achieve full employment. As for the fate of QE, the Central Bank kept the intrigue, noting that the options for the bond program include another $ 100 billion round, reduced purchases, and the distribution of bonds. At the same time, RBA members said that they discussed an approach to a more frequent review of bond purchases depending on the data flow during the June meeting. This suggests that key macroeconomic releases will continue to affect the pair, especially in the labor market and inflation area.
Therefore, today's published document retained the intrigue regarding the possible result of the next RBA meeting, which will be held on July 6. However, the Australian dollar reacted minimally to today's release, especially in light of tomorrow's Fed meeting. On Wednesday, the main event for dollar bulls will take place: either the members of the US regulator will intensify the "hawkish" rhetoric, reacting to the two-month record CPI growth, or ignore the inflationary records, keeping the "dovish" position.
It is known that US inflation indicators affect the dynamics of dollar pairs only through the prism of the "hawkish" comments of the Fed representatives. If these members ignore the latest inflationary release, pointing out the temporary nature of inflation growth and the low base of the last year, the US dollar will be under the strongest pressure including in pair with the Australian currency.
From a technical point of view, the AUD/USD pair is trading in the range between the lower and upper lines of the Bollinger Bands indicator on the daily chart (0.7680-0.7790), without actually leaving the border of the 77th figure. If the results of the June Fed meeting are not in favor of the US currency, the Australian counterpart will once again enter the area of the 78th figure and test the resistance level of 0.7850 (upper line of the Bollinger Bands on the weekly chart). This is the most likely scenario.
However, if the FRS members still voiced "hawkish" rhetoric, allowing a slowdown in the pace of QE in August or September, the US dollar will strengthen its position all over the market. In this case, the AUD/USD bears will be able to push the lower limit of the above range and take the price level of 0.7680-0.7580.
