The Australian dollar extended losses on Tuesday morning with AUD/USD testing once again the 0.7530 support area. The publication of the November RBA minutes showed, as expected, that the central bank maintained its dovish tone. In addition, the minutes revealed that the Reserve Bank was concerned about the job market outlook and persistent weakness in wage growth. Against such a backdrop, momentum is fading for the Aussie and sovereign rates are sliding. Moreover, spread between Australian and US treasuries reached a new bottom. The 2-y spread fell to 0.01%, while the 10-y year spread slid to 0.18%.
The monetary policy divergence between the Fed and the RBA suggests that the Aussie is not out of the woods yet. This should translate into further debasement for the Aussie.
On the data front, it is going to be very quiet for the next couple of weeks. The RBA is holding its last meeting of the year on the 5th, while the third quarter GDP is due for release on the 6th. A break of the $0.75 threshold should open the road towards $0.7330 (low from May 9th).