-RBA
The Australian Dollar moved lower some 30 pips on Tuesday, pushed lower by RBA minutes as well as comments that suggested the currency will be weaker in the nearest future due to a decline in capital flows. Oz currency, often referred as the Aussie, fell 0.33% versus the greenback trading around 0.9297 at the time of writing.
With almost no surprises to investors, minutes from the RBA's May 6 meeting showed the central bank is determined to keep interest rates steady for some time as inflationary pressure is limited, while economic growth adjusts to fewer resource projects. Additionally, the central bank was forced to keep borrowing costs on hold as the government is preparing for a fiscal tightening, that is expected to drag on economic growth. Analysts believe Glenn Stevens will not revise the monetary policy for the rest of the year in order to prevent a growth gap, as companies in the key mining sector are scaling back development. Furthermore, housing market is slowing after a sharp increase in house prices spurred by record-low interest rates, also underscoring why the central bank may be reluctant to add to 2.25% of rate cuts since late 2011.
Last week's budget included large spending cuts, especially in the number of government grants, healthcare funding as well as education allowances, also suggesting this year's remaining meetings will be lean.
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