AUD/USD lost ground following RBA minutes

Australian dollar fell against its US counterpart on Tuesday, following the release of the minutes by Reserve Bank of Australias (RBA) latest meeting on monetary policy.

AUD/USD slid to its lowest point on Tuesday at 0.9043 at 4:03 GMT, after which consolidation followed at 0.9061. Support for the pair was expected at August 15th low, 0.9058, while resistance was to be encountered at July 24th high, 0.9318.

RBA Governor Glenn Stevens and his board reduced the benchmark interest rate by 2.25% since late 2011, as economic growth decelerated and unemployment rate increased. Having erased 12% of its value over the past six months, the Australian currency decreased as traders bolstered their bets that there was more than 50% chance of a rate reduction in December. In addition, in August the RBA revised down its growth forecast to 2.25% in the year to December 2013, compared with the 2.5% forecast made three months ago. Australian unemployment rate was at an almost four-year high of 5.7% in the month of July.

The Reserve Bank of Australia said, in the minutes of its most recent policy meeting: “Regarding the communication of this decision, members agreed that the bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further. The course of the exchange rate would be important.”, cited by Bloomberg. The central bank also added: “Inflation remained low and, allowing for the effects of the introduction of the carbon price, was around the bottom of the target range. Wages growth was slowing. … inflation would be pushed up for a period by the lower exchange rate, but even so was forecast to be around the middle of the target range.”

Meanwhile, the Aussie was trading higher against the kiwi dollar, as AUD/NZD cross advanced 0.48% to 1.1353 at 6:29 GMT. On the other hand, the Australian currency lost positions against the Japanese yen, with AUD/JPY pair falling 0.75% to trade at 88.23 at 6:29 GMT.