The Australian and New Zealand Dollars are trading higher shortly before the U.S. opening. Australian Dollar traders are reacting to the Reserve Bank of Australia minutes, New Zealand Dollar traders are preparing for the release of the quarterly GDP report on Thursday and the country’s general election on September 23. Both are also preparing for the Federal Reserve’s interest rate decision, monetary policy statement and economic projections on Wednesday.
At 0923 GMT, the AUD/USD was trading .7992, up 0.0033 or +0.41% and the NZD/USD was at .7293, up 0.0030 or +0.38%.
According to the minutes of the RBA’s September 5 meeting, the central bank remains upbeat on growth, indicating that it believes the economy is moving into a new phase as it shrugs off a lengthy downturn in mining investment while job market conditions also improve.
At its monetary policy meeting, the RBA kept the benchmark interest rate unchanged at a record low 1.5 percent for the thirteenth straight month.
In the minutes, the RBA noted a broad job market improvement, and that recent data continued to support its forecast for 3.0 percent GDP growth in 2018.
“Employment growth had been broadly based across the states, suggesting that the adjustment to the end of the mining boom was nearing completion,” the minutes said.
The minutes fell well short of signaling a change in the RBA’s policy stance, with the central bank acknowledging wage growth remains weak, and therefore might hold back a rise in inflation.
“The board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time,” the minutes said.
“A gradual increase in growth in wages and inflation was expected as the spare capacity in the labor market was reduced and the economy continued to strengthen,” the RBA said.
In my opinion, the RBA minutes were not upbeat. The central bank acknowledged the improvement in the labor market conditions, but were clearly disappointed by an expected slow response from wages.
RBA Governor Philip Lowe will give a speech on Thursday, where he is expected to highlight improvements in the economy and discuss the outlook as non-mining investment grows and job market conditions pick up.
The New Zealand Dollar jumped as much as 1 percent on Tuesday following the release of a new poll showing the governing National Party could rule alone after the country’s general election on September 23.
This article was originally posted on FX Empire
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