Minutes of RBA’s October meeting indicated that the board was already ready to push forward new easing measures. The announcement was delayed to November, partly for allowing the market to digest the Government’s budget, and partly for Governor Philip Lowe to outline the changes first.
In short, the minutes noted that members continued to “consider how additional monetary easing could support jobs as the economy opens up further”. They “discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative, and buying government bonds further along the yield curve”. They believed that “these options would have the effect of further easing financial conditions in Australia”.
Suggested readings on RBA:
- RBA Minutes Reveal Strong Conviction to Further Easing in November
- RBA: Minutes of the October Meeting Confirm Decision to Cut Rates on November 3
Australian Dollar trades broadly lower after today’s RBA minutes. EUR/AUD has taken out 1.6586 resistance yesterday already. The cross is now at least correcting the whole decline from 1.9799 to 1.6033, with 38.2% retracement at 1.7472 as target. Ideally, we should also see a firm break of 1.8411 resistance in GBP/AUD to double confirm the bearish reversal in Aussie. In the case, GBP/AUD would at least be correcting the fall from 2.0854 to 1.7493, with 38.2% retracement at 1.8777 as next near term target.