The RBA’s October meeting Minutes will provide additional colour around emerging risks as well as their baseline views.
However, the focus for markets and the AUD will remain on global front ends and offshore equities. With that being said, the Aussie has ridden on the coattails of New Zealand's surprise inflation data yesterday that came in much hotter than expected and highest in a decade. The Consumers Price Index rose 2.2 per cent in the September 2021 quarter, the biggest quarterly movement since a 2.3 per cent rise in the December 2010 quarter. Nonetheless, analysts at ANZ Bank are not so sure that this can be expected of the Australian economy just yet:
''We are not anticipating Australia’s inflation to be anywhere near as strong as New Zealand’s,'' the analysts said. ''If trimmed mean inflation surprises on the upside, then the composition of the price increases will matter. If most of the strength was driven by tradable prices rather than non-tradable, the RBA will likely be more willing to look through it rather than take it as an indication that we are starting to see evidence of more widespread sustained inflation.''
The RBA reiterated its dovish stance in the Oct statement that it does not expect to hike the cash rate before 2024 and the Minutes today should not surprise. Instead, more focus will be on the Governor's panel participation on "Central Bank Independence, Mandates and Policies" on Thurs/Fri which likely makes for a mundane event around the Minutes today as traders hold off for bigger fish and more meat on the bone.
How might the Minutes impact AUD?
The event is unlikely to move the dial too much, but surprises can happen. Nevertheless, AUD/USD is at the mercy of external factors more so as the markets have priced in the RBA for the meanwhile. For instance, in yesterday's preview ahead of the Chinese data, it was explained that AUD/USD is technically on the verge of a run to test the daily chart's 61.8% Fibonacci that meets territory near 0.7300:
From an hourly point of view, it was illustrated as follows:
However, the price action did not quite follow as forecasted. We did see the drop sometime after the data, albeit the bulls took out the resistance on the retest and now bears need another break of 0.7410/0.7400 of face stringer bullish momentum from trendline support:
Further bullish AUD reading: AUD/NZD Price Analysis: Traders, don't get caught out!
About the 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.