The published minutes of the last RBA meeting fully confirmed our expectations that the bank would not think about raising interest rates in the near future.
The content of the published protocol clearly indicates that the regulator sees benefits from lower interest rates than from high ones. The bank argued the likely decrease in interest rates in August and in November of this year.
It seems to us that this behavior of the Reserve Bank of Australia is explained not only by domestic economic reasons but also by an increase in expectations that the Fed may have to begin the process of lowering the cost of borrowing. In this case, the Australian regulator would not like to be late for the actions of the Federal Reserve but rather to anticipate them in order to put pressure on the national currency rate and to promote a better position of exports from the country on the world market.
"Fears" of the RBA confirmed today in their comments as FRS President of the Federal Reserve Bank of Boston E. Rosengren made it clear that he is a supporter of low interest rates in the current economic conditions in the US. Although he acknowledged that the country's economy is still in "pretty good condition" and that he does not expect recession in the foreseeable future, his words clearly indicate that such fears really exist in the US Central Bank, just for the time being they do not want to publicly speak.
It seems that investors can no longer believe in the positive attitude of the Fed representatives regarding the American economy. They are frightened by the continuation of the process of "flattening" the short and long government bonds of the US Treasury, as well as the apparent drop in volumes on the unrestrainedly growing US stock market. Looking at the past, one can say that the current situation is largely preceded by those that preceded the crises of the late twentieth and early twenty-first century. These sentiments are reflected in all segments of the global financial market.
While many market players do not want to notice this, the existing dynamics in the markets in general and especially for currencies, where volatility has fallen to the lowest levels due to uncertainty, clearly indicates that large market players continue to avoid making serious transactions. This is clearly manifested in the Forex market in the lateral dynamics of currency pairs, where the dollar is present.
Assessing the likely prospects, we still believe that the lateral dynamics in the near foreseeable future in the currency markets will continue.
Forecast of the day:
The AUD/USD pair continues to decline in the wake of the publication of the minutes of the last Fed meeting on monetary policy. A decline below 0.7145 will lead to a fall in prices to 0.7125 with the prospect of a further drop to 0.7100.
Our forecast for the USD/JPY pair remains the same. We believe that its decline below the level of 111.90 may lead to a fall in prices first to 111.55 and then to 111.30.
