AUD/CAD edges up ahead of Canada CPI as RBA minutes hardly offer new info

Key points

The Australian Dollar was slightly firmer against its Canadian counterpart on Tuesday, after the minutes of the Reserve Bank of Australia’s latest policy meeting did not offer any major surprises on interest rate outlook.

RBA policy makers considered a 25 basis point rate hike to 4.35%, before deciding to leave the cash rate without change at 4.1%, the minutes showed.

The RBA board noted that inflation in Australia had cooled from its peak, but was still elevated. Market measures of short-term inflation expectations had eased from their peaks, but were also high.

Policy makers will reassess the situation next month, as they expect more data on inflation, the global economy, the labor market and household spending, the minutes stated.

“The RBA minutes… did not contain much new information from Governor Lowe’s recent speech, where he seemed less definitive on the need for further rises and more attuned to potential growth risks,” Tapas Strickland, head of market economics at National Australia Bank, was quoted as saying by Reuters.

“This tone was arguably reflected in the minutes, though there was a strong case presented for further tightening.”

Meanwhile, CAD traders now shift their focus to the June CPI inflation numbers due out at 12:30 GMT. Canada’s annual headline inflation probably eased to 3% in June from 3.4% in May.

Annual core CPI inflation probably slowed to 3.5% in June from 3.7% in the prior month.

Bank of Canada’s baseline scenario projects inflation will decelerate to the 3% level by summer, while May figures raised doubts about the extent of rate increases remaining in BoC’s tightening cycle.

As of 7:14 GMT on Tuesday AUD/CAD was edging up 0.19% to trade at 0.9012. Last week, the minor Forex pair went up as high as 0.9056. The latter has been the pair’s strongest level since June 19th (0.9079).