From the FXWW Chatroom – Hawkish RBA minutes have reduced the chance of an end-of-year rate cut in Australia. Importantly, the minutes cited housing market tightness and potential misallocation risks as a reason for keeping rates unchanged. Before the release of the minutes, markets assumed the increase of mortgage rates by commercial banks would allow the RBA to emphasis its easing bias. This hope has been disappointed. Moreover, the RBA underlined the pick-up of service sector exports resulting from the weaker AUD. Following the hawkish minutes the AUD should regain the ground it lost last week when rising mortgage rates signalled a tightening of financial conditions. We expect a resumption of the near-term AUDUSD recovery and maintain our bullish strategies.
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