AUDUSD is reaching stability after plunging earlier this week. The Australian Dollar is consolidating against the USD after plunging earlier. The current quote for the instrument is 0.7192. The commodity market is shaking, pulling the floor out from under the Aussie. Moreover, the coronavirus-related news from China is offering little room for optimism. Taken together, these factors made the Australian currency fall.
In the morning, the Reserve Bank of Australia published its Meeting Minutes, which said that the current geopolitical conflict was a major source of uncertainty, which should be taken into account.
The RBA told once again that it wasn’t going to raise the interest rate until the CPI reached stability in the range between 2-3%. Inflation has grown recently, it’s a fact, and the regulator said that it was too early to expect the indicator to return into the target range. At the same time, the RBA is ready to sit and wait, watching different factors that may influence the Australian CPI – first of all, it’s about energy and food prices surge all over the world. It’s very difficult to make any inflation-related predictions due to the recent events in the commodity market.
As a matter of fact, the RBA is saying that it would not make any abrupt moves until the external background became clearer. It’s wise but the situation might require act quickly, if, for example, it is clear that high prices are here to stay. In this case, the regulator will have to raise the rate faster than planned.
The labour market balance in Australia allows to buy some time before making decisions. The economic diversification process, which took much time and effort after the previous global crisis, is now serving the interests of the state. It’s the foundation that helps to wait out the tough time.
