Aussie lower after RBA Meeting Minutes

Tuesday, Apr 21 2015

RBA Meeting Minutes showed that Board members were once again considering rate cut before deciding to leave interest rates unchanged. In assessing the operation of the cash flow channel in particular, they noted the responsiveness of borrowers and savers to changes in interest rates and asset prices was unusually uncertain in a world of very low interest rates and high household leverage," the RBA said. "Members also saw advantages in receiving more data, including on inflation, to assess whether or not the economy was on previously forecast path and allowing more time for the economy to respond to the reduction in the cash rate earlier in the year," the RBA said.

At the meeting, the RBA also discussed the unusual trading in the Australian dollar that occurred in the period immediately prior to the announcement of the board's decisions in both February and March. "Members noted that the illiquid conditions that existed in the foreign exchange market at that time meant that small trades could move the price by relatively large amounts, and that once such movements occurred it would be highly likely that algorithmic trading strategies would exacerbate such movements, particularly given the illiquid environment. Moreover, the occurrence of these movements meant that liquidity was likely to decline further as more liquidity providers pulled back from the market during this window," the RBA said.

After the data Aussie was pushed lower and is currently being traded slightly below 0.77 handle. Pair is likely to find support around 0.7650 area and resistance above 0.7750 level. There will be no major data releases in the rest of the session.

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