At 11.30am AEST today the Reserve Bank of Australia (RBA) releases minutes of the meeting relating to the Interest Rate decision announced at the start of this month. Interest rates were held as the RBA did not feel it was necessary to adjust them. However, what makes the minutes of the meeting so important this month is that three days after the interest rate announcement, the Governor of the RBA Glenn Stevens, came out and said something that made most AUD investors cringe. This was the words “Australian Dollar Over-valued”; these words have not been spoken by Stevens since December last year.
Along with his above comments made on the 3rd of July, he also said that the Gross Domestic Product (GDP) figure was an “over-estimation” and the Australian Dollar is overvalued against the majors, naming the USD and EUR specifically. Furthermore, the statement contained “Overvalued, and not by just a few cents”. This statement caused a huge reaction from investors and the AUD fell almost one cent in less than 10 minutes.
The reason why these minutes mean a lot to investors is because they allow the public to know the continuing stance that the RBA has on the AUD. The last thing that AUD investors need is Stevens to start “Dollar Bashing” as he did late last year, Given that last year’s “campaign” resulted in the AUDUSD falling to lows of 0.85 within months, having started from similar levels that we are seeing now.
Going forth to tonight, US Advance Retail Sales figures are out and the expectations are bullish towards the USD. Today may be an eventful day and there is no doubt that there will be movement, possibly against AUD.