Australian dollar maintains its position as the RBA Minutes emphasize the necessity of restrictive monetary policy.

After the release of the Reserve Bank of Australia’s (RBA) November Meeting Minutes on Tuesday, the value of the Australian dollar (AUD) remains stable in relation to the US dollar (USD). According to the minutes, the RBA board emphasizes the need for restrictive monetary policy and expresses caution about the possibility of further inflation.

RBA member Board also stressed that “nothing can be rule in or out” with regard to monetary policy changes in the future.

Members of the RBA Board also say there is no “immediate need” to change the cash rate, but since nothing can be rule in or out, they left the possibility of future modifications open. The technical premise behind current projections is that the cash rate will not change until the middle of 2025.

After Reserve Bank of Australia (RBA) Governor Michele Bullock made hawkish comments last week, the Australian dollar strengthened. Bullock underlined that interest rates will not change until the central bank is satisfied with the outlook for inflation because they are currently restrictive enough.

On Tuesday, a representative of China’s National Development and Reform Commission (NDRC) said that the nation has “ample policy room and tools to support economic recovery.” The official was optimistic about China’s economic future and predicted that the recovery momentum would continue into November and December. Any modifications Given that Australia and China are close trading partners, changes in the Chinese economy may have an effect on Australian markets.

Even though Federal Reserve (Fed) officials recently made hawkish statements, the US dollar (USD) still in a downward correction. However, investors expect the incoming Trump administration to prioritize tax cuts and impose higher tariffs, so the downside of the greenback might be limited. The pace of Fed rate cuts may be slow by these actions, which could increase inflation.

The October US Building Permits and Housing Starts data, which scheduled for release on Tuesday, is currently the focus of traders’ attention.

Daily Market Update: Australian dollar gains strength After the release of the RBA Meeting Minutes.

Fed Chair Jerome Powell emphasized the economy’s resilience, strong labor market, and ongoing inflationary pressures while downplaying the possibility of rate cuts in the near future. Powell stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.”

Markets frequently overreact to interest rate changes, Chicago Fed President Austan Goolsbee said on Friday. Goolsbee underlined how crucial it is that the Fed proceed cautiously and gradually in its pursuit of the neutral rate.

While preserving market confidence in a possible rate cut in December, Boston Fed President Susan Collins moderated expectations for further rate cuts in the near future. Collins said, “I don’t see a big urgency to lower rates, but I want to preserve a healthy economy.”

October saw a 0.4% month-over-month increase in US retail sales, which was higher than the 0.3% market forecast. Furthermore, the November NY Empire State Manufacturing Index was released. a surprising increase, showing strong manufacturing activity, at 31.2 as opposed to the predicted 0.7 decline.

China’s retail sales increased by 4.8% year over year in October.

China’s retail sales increased by 4.8% year over year in October, exceeding both the 3.2% increase in September and the 3.8% increase that was anticipate. In contrast, industrial production increased by 5.3% year over year, which was less than the 5.6% growth that was predict and the 5.4% growth that was observe during the prior period.

For the third consecutive month, Australia’s seasonally adjusted unemployment rate remained stable at 4.1% in October, in line with market expectations. However, compared to the expected 25.0K new jobs, employment change data showed that only 15.9K new jobs were add in October.

Australia’s consumer inflation expectations fell to their lowest level since October 2021 in November, from 4.0% in the previous month to 3.8%.