Australian Dollar Makes Strides Forwards Despite Dovish RBA Minutes

AUD GBP Higher after Inflation Data, Sunak Budget Ahead

Investors in the AUD were pleasantly surprised yesterday as trading concerning the Aussie dollar looked up. Expectations were down on Monday’s pessimistic, dovish minutes which were released by the Reserve Bank of Australia (RBA). The cautious tone was set over the AUD as interest rate cuts looked likely before the years end. Several figures in the RBA had appeared to be open to the idea of another cut soon.

RBA Minutes do not Unsettle the AUD

The RBA minutes reported that the bank is looking to take a dovish approach to its monetary policy. This is following recent underperformance and pressure from US-China trade talks. However, news that broke out yesterday was positive for the AUD. Reports suggested that the Australian dollar reversed its earlier losses which were caused by the surprise dovish comments in the RBA minutes. The AUD has rallied, especially so once the London trading session opened. This provides a positive outlook for the AUD despite recent poor performances in the market.

GBPAUD Rate Steady but Prepared for Volatility

The GBPAUD interbank exchange rate was trading at around AU$1.8935 yesterday, which by recent figures is a steady rate. The risk-sensitive Australian dollar is still heavily under pressure from the US-China trade talks however. The volatility of the talks has caused fluctuations for the AUD over the past weeks.

A negative downward pressure was placed on the AUD after President Trump suggested that the US may raise tariffs even higher if a ‘Phase One’ deal could not be reached between the two. This threatening approach has not filled investors with optimism, but US representatives were hopeful, suggesting that if their negotiators felt the deal was hopeless, they would have stopped already.

GBP Struggles Against AUD Following Tuesday’s Live Debate

Wednesday was a difficult day for the GBP after it failed to edge above the AUD following Tuesday night’s live election debate between Prime Minister Boris Johnson and Labour Party leader Jeremy Corbyn. Neither leaders came out ahead of the other and failed to instil faith that the Conservatives would hold a majority in December. To add to this, a flash poll from YouGov displayed a modest majority for the Tories at 51% to 49% but this was not enough to buoy the market confidence in the GBP.

Despite the Conservatives slight lead over the Labour Party, the performance from the live debate only emphasised political concerns involving the likelihood of a Tory majority come December 12th. Analysts did mention that the GBP was not significantly affected by the debate and could have been swayed much more should Jeremy Corbyn have gained an advantage in the polls.

For more sterling and Australian dollar news or if you have a currency requirement you can get in touch with me, James Lovick, directly at [email protected], or call +44 (0) 1494 360 899 to discuss these factors in more detail.