Having pulled back from a 25-week high, the AUD/CAD currency pair firmed on Tuesday, as risk sentiment remained buoyant on prospects the Federal Reserve could begin a rate-cutting cycle next year.
Meanwhile, the minutes of the Reserve Bank of Australia’s December 5th policy meeting showed board members had considered raising interest rates for a second consecutive month, but decided to pause and wait for more data.
RBA policy makers noted there were “encouraging signs” of progress in Australia’s inflation towards the central bank’s target range of 2% to 3%, while disinflation overseas had picked up and this could be emulated in Australia.
“Members agreed there was sufficient value in waiting for further data to assess how the balance of risks was evolving and how best to balance these risks when setting policy,” the RBA minutes stated.
On the macro data front, CAD traders now shift their focus to the November data on Canadian CPI inflation.
Annual headline consumer inflation in Canada probably slowed to 2.9% in November, according to market consensus, from 3.1% in October. The latest reading has been softer than the Bank of Canada’s projection that CPI inflation will likely remain near 3.5% through mid-2024. The official data by Statistics Canada will be released at 13:30 GMT.
As of 8:46 GMT on Tuesday AUD/CAD was edging up 0.26% to trade at 0.9005. Last week, the minor Forex pair went up as high as 0.9061. The latter has been the pair’s strongest level since June 19th (0.9080).
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