RBA Minutes: Target for three-year yields to be maintained until progress made towards full employment, inflation

Reserve Bank of Australia minutes

Target for three-year yields to be maintained until progress made towards full employment, inflation.

More to come...

AUD/USD & AUD/JPY outlook

the bulls are back in town, supported on the current account surplus theme that has been supporting the bid within the COVID-19 recovery rally this year so far. 

Australia's minister for resources spoke with the Financial Times and confirmed that Australia has been shielded from an even worse pandemic downturn
record demand for resources from China. This is despite the recent concerns over trade wars and a potential falling out between the two major trade partners. 

However, as analysts at TD Securities pointed out, "market expectations of further copper strength have certainly begun tapering in recent weeks, with the pace of demand growth slowing, support from the supply side easing and CTA buying reaching its conclusion."

As the expectations normalize, and sentiment in the market remains on edge with persistent US-China disputes and COVID infections still growing around the world, the red metal could come under selling pressure in the near term, especially as net spec positioning on both the COMEX and LME has recently shot to its highest levels since mid-2018. 

Australia exports of copper to China was US$1.15 Billion during 2019, according to the United Nations COMTRADE database on international trade.

Meanwhile, the US dollar has been on the backfoot as risk sentiment gathers pace over the optimism over a vaccine for COVID-19. 

The weakness in the DXY and strength on Wall Street has been supportive of risk flows benefitting AUD and also the markets risk barometer, AUD/JPY which offered a textbook trade set up earlier in the Asian session today as follows:

• AUD/JPY 15-min chart long entry strategy playing out

The description of the RBA minutes 

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.