Monday night the Reserve Bank of Australia (RBA) released its dovish minutes for the April 2nd meeting.
Since the inflation outlook is not a concern, the central bank could cut rates if needed. They will wait and see if businesses other than mining continue to rebound. So far business has been supported since the RBA reduced the cash rate by 1.75 points in cuts to 3.0% in over the past year. Expectations are around 33% that they might cut rates a quarter percentage point at the May 7th meeting.
GROWTH STILL A CONCERN
The growth forecast is still below trend and traders should expect the RBA to act if conditions worsen over the next quarter. The high exchange-rate is still a concern, but that is not slowing institutional investors from buying Aussie dollars.
BUYING DIPS
While we wait for the effects of the earlier rate cuts to boost the economy, investors are buying Aussie/dollar (AUD/USD) on major dips. The range bound trading of AUD/USD may persist into the summer and traders should look to buy the Australian currency on dips to 1.0250-1.03 and exit near the 1.05 level.
