AUDUSD Falls on RBA & Mining News

In early morning trading, the AUDUSD fell as the Reserve Bank of Australia released its MPC Minutes from its recent Interest Rate Meeting.  While the central bank did indicate that it believes the global economy was seeing improvement, it signaled that interest rates will remain unchanged for the next several months.  Although on the surface the comments could be construed as dovish, Aussie bulls can take comfort that the RBA didn’t stress any worries about the currency’s strength.  As such, the central bank appeared to diminish chances that it would work to intervene to weaken the Aussie.  Such a stance could lead to further AUDUSD gains a Forex traders become more comfortable with Australia’s economic outlook.


Elsewhere, Forex traders were reacting to negative forecasts from miners who suggested demand was slowing for iron ore.

 More on the RBA’s MPC Minutes and the mining news from the WSJ:

The Australian dollar was lower Tuesday after the central bank kept open the possibility of interest rates cuts in coming months and major miners warned of slowing iron ore demand.
At 0540 GMT, the Australian dollar was trading at US$1.0572 down from US$1.0592 late Monday and Y88.15 down from Y88.34.

In minutes of its March 6 policy meeting, the Reserve Bank of Australia said the ongoing risk of a sharp downturn in Europe and uncertainty over how the soaring Australian dollar meant caution was needed.

In the event of a slowdown in the A$1.3 trillion commodity-rich economy stemming from Europe's difficulties, the RBA said it had "ample scope" to cut interest rates if needed.
Traders said the focus of markets is now on the May policy meeting of the RBA. By that time, the central bank will have seen first-quarter inflation data and will know if there is room to cut interest rates.

Comments by the country's biggest miners also ripped support out from under the Australian dollar.  

Growth in China's demand for iron ore will drop "to single digits, if it is not already there," Ian Ashby, president BHP Billiton's iron ore division, told reporters in Perth.  Read More