Pound Australian Dollar Exchange Rate Edges Higher Following RBA Minutes

Published: Tuesday, 18 December 2012 09:00 BST - Written by Minesh Chaudhari

STORY LINK Pound Australian Dollar Exchange Rate Edges Higher Following RBA Minutes

The minutes of the latest Reserve Bank of Australia policy meeting, which took place in the first week of this month, were released during last night’s Asian session and they were notable more for what they did not contain than for what they did contain.

The notes from the RBA’s December board meeting observed diminishing levels of structural investment in the key mining and extraction sectors of Australia’s economy and suggested that conditions in the Antipodean nation’s employment market appeared to be softening. However, there was no explicit mention of further interest rate cuts in 2013, following this month’s trimming of its key lending rate from 3.25% to 3.00% by the RBA. The fact that the memos described that ‘on balance’ the 25 basis point cut was merited has led analysts to speculate that it was a split decision by board members.

The initial market reaction to the RBA’s minutes has been mildly Aussie Dollar negative, with the GBP AUD exchange rate climbing 0.25% to 1.5389 in the lead-up to the opening bell in Europe’s equities markets. This anti-Aussie sentiment is by no means guaranteed to persist throughout the day.

Elsewhere, today’s session brings the release of slightly more tier one data than was present during yesterday’s barren sitting; the centrepiece comes later this morning in the shape of the latest UK CPI inflation reading. The November number is expected to show well above the government’s 2.0% target. However, a showing of above the anticipated 2.7% print would have a marked effect on investors’ thinking regarding the likelihood of more Quantitative Easing in the UK in the early part of 2013. Anything above 3.0% would surely preclude such an event, in the short-to-medium term, at least.

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