Earlier last night, the Reserve Bank of Australia has held rates unchanged at 1.5% and this has triggered some slight weakness for the Aussie. It is the 14th consecutive months that rates remain unchanged. Central bankers declared that there are confident about growth picking up within a near future. RBA is definitely not in a hurry to tighten its monetary policy, especially since the Aussie stays strong.
Fundamentals remain somewhat mixed with low wage growth, which concerns the central bank’s members. Inflation is currently standing below 2%, just under the long-term inflation target of 2%-3%. Q2 growth printed at 0.8% q/q, which was a good improvement.
The AUD is staying strong. The pair dipped below $0.78 which is the lowest level in the last two months. Yet, we believe that upside pressures on the Aussie are set to continue due to the improving nature of the Australian economy and their strong exposure to gold and metals. Indeed, we consider that the precious metals’ prices are going to be driven higher because of increasing global inflation.