AUD/USD holds range as RBA minutes signal more easing – BBH

AUD/USD dipped slightly but remains within its multi-month 0.6400-0.6600 range, BBH FX analysts report, BBH FX analysts report.

RBA minutes highlight path of gradual cuts

"The RBA minutes of the August 12 policy meeting suggests more easing is in the pipeline. At that meeting, the RBA delivered on expectations and cut the policy rate 25bps to 3.60%. The decision was unanimous. The minutes stressed that 'some further reduction in the cash rate over the coming year' appeared likely and flagged that the pace of decline in the cash rate will largely be driven by labor market conditions."

"According to the minutes, a slightly faster reduction in the cash rate over the coming year would be appropriate if the labor market turned out already to be in balance. In contrast, a gradual easing pace may be warranted if labor market conditions remained a little tight relative to full employment."

"Australia’s July labor force report showed solid full-time job gains and argues for a gradual easing path, underpinning AUD. The next jobs print is due September 18 and will be a key driver of RBA rate expectations. Cash rate futures currently imply 55bps of easing in the next 12 months."