Release Explanation: Changes in rates affect interest rates in consumer loans, mortgages, and bond rates. Since short term interest rates essentially reflect the return on holding a currency, rate decisions usually affect the exchange rate of the Australian Dollar. Increases in rates, or even expectations for increases, tend to cause the Australian Dollar to appreciate, while rate decreases cause the currency to depreciate. This is a detailed record of the recent interest rate meeting. This release is very important for traders to discern the RBA’s stance on monetary policy and hints of future rate shifts.
Trade Desk Thoughts: The following reasons were given for the RBA’s decision to leave rates unchanged
• Worldwide GDP was now expected to fall by 1.3% in 2009
• Industrial production was still falling in the U.S. and the euro area.
• Economic conditions in the euro area remained very weak. Sentiment had remained at a very low level in the early months of 2009, and the unemployment rate had increased to 8.9% in March.
• Domestically, consumer sentiment remained well below average, although it had improved a little recently and was considerably better than in other countries.
• Building approvals had recently picked up, which was confirmed by figures for March released during the meeting.
• Australian banks remained in good financial health, in absolute terms and particularly in comparison with their overseas counterparts.
Forex Technical Reaction: The aussie had almost no reaction to the release of the minutes. Since the start of the new trading day, the pair has lost less than 10 pips after trading in a 35 pip range