Australian dollar extends gains, RBA minutes next

The Australian dollar extended its gains for a fourth straight day. In the European session, AUD/USD is trading at 0.6537, up 0.10%.

Last Tuesday, the Australian dollar suffered its worst one-day showing of the year, declining by 1.18%, after US inflation was higher than expected, which sent the US dollar surging higher. The Aussie has since recovered those losses and is trading at a two-week high against the US dollar.

Markets eye RBA minutes

The Reserve Bank of Australia will release the minutes of the February meeting on Tuesday. At the meeting, the RBA maintained the cash rate at 4.35%, as expected. The RBA has raised rates only once since June, which has led to the market pricing in rate cuts later this year. The RBA has pushed back against these expectations, as it is concerned that inflation remains sticky and won’t fall back to the 2%-3% target range until 2025.

At the February meeting, board members kept a rate hike on the table, with the policy statement noting that “a further increase in interest dates cannot be ruled out”. The minutes could provide some insights as to what factors would prompt the central bank to raise rates.

Last week’s employment report was softer than expected and the RBA will be keeping a close eye on Wednesday’s wage price index report. The RBA has reiterated that its rate path would be data-dependent, and wage inflation is an important contributor to inflation. A soft release would reduce the likelihood of the RBA raising interest rates.

AUD/USD Technical

• 0.6506 and 0.6468 are providing support
• 0.6570 and 0.6608 are the next resistance lines

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