Tuesday saw a fairly poor performance by the Australian Dollar against most major currencies, following the release of the RBA (Reserve Bank of Australia) meeting minutes from their last interest rate decision.
The minutes will basically show what was discussed at the meeting and how the RBA came to various decisions and i’m afraid the tone was fairly negative when reading through discussions and future fiscal plans.
The main areas of concern are the on-going trade wars between Donald Trump and China, as many regular readers of this site will be aware Chinese economic performance is fairly crucial to the performance of the Australian economy and the Australian Dollar. Not only do China import a huge amount of goods from Australia but they Chinese tourists make up a fairly large percentage of tourism in Australia.
The large sum of household debt at present in Australia is also of great concern to the RBA. Household debt is currently at worrying levels and what this means is that until this starts to drop back off it will be very difficult for the RBA to raise interest rates, and they did put a nod to this in the minutes.
Should they raise rates then we may see a large quantity of households go into default in Australia which would only escalate the economic problems even further, it does now appear that unless things improve then will not be seeing an interest rate hike for the foreseeable future which will more than likely hold the Australian Dollar back against other major currencies.
An interest rate hike is generally seen as positive for a currency and with other areas around the globe slowly raising their interest rates the Australian Dollar is in danger of being left behind.
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