FX.co ★ Aussie Dollar Edges Higher

On Tuesday, the Australian dollar strengthened to approximately $0.649, recovering some of the losses from the previous day. This uptick followed the Reserve Bank of Australia's release of its latest minutes, where it reiterated a cautious outlook and emphasized its reliance on economic data to guide future monetary policy decisions. Earlier in the month, the central bank opted to maintain the cash rate at 3.60%. This decision reflected a reluctance to loosen policy further due to persistently high inflation levels, strong consumer demand, and a resurgence in the housing market. Despite concerns over a potential weakening in the labor market, these were largely dismissed, as employment figures rose and the unemployment rate dropped in October. Consequently, the probability of an immediate policy easing was reduced significantly, with current estimates placing a mere 40% chance of a rate cut by May next year. However, the RBA conceded that certain conditions might still necessitate monetary easing, particularly if the labor market deteriorates or the broader economic recovery falls short.