Author: Dennis Li
The Minutes from the July RBA Board meeting released yesterday reflected broadly similar sentiment to the July decision statement and providing more clarity on why the Board decided to cut 25 basis points for the second consecutive month. It also showed that RBA is ready to cut interest rates again “if needed” to support employment, wages growth and inflation. The markets have factored in a 40% probability of another rate cut to 0.75% by year-end.
From the data released overnight, US retail sales rose by 0.4% in June as households stepped up the purchases of motor vehicles and a variety of other goods. The USD rallied by 0.47% against a basket of other major currencies on the likelihood the Fed could adopt a less dovish stance in regard to interest rate moves. The AUD lost almost all of its gains from Monday but remains well supported above the 0.7000 mark against the USD.
The GBP was under pressure as investors are nervous about the prospect of Boris Johnson winning the Conservative party leadership and becoming the next British prime minister as early as the end of this month. The AUDGBP rose by 0.62% to its 6-month high overnight.
With no market-moving data released this morning, investors will focus on the UK and EU’s inflation data later tonight.
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