Australian Dollar Weak After RBA Minutes, House Price Index

The Australian dollar fell today, being one of the weakest currencies on the Forex market during Tuesday’s trading. That is despite the relatively upbeat economic outlook of the central bank and better-than-expected housing data.
The Reserve Bank of Australia released minutes of its latest monetary policy meeting, which has happened on March 2. The central bank made positive comments about the state of Australia’s economy:

In Australia, the economic recovery was well under way and had been stronger than expected previously.

Furthermore, the outlook for the next GDP report was also good:

The December quarter GDP data were expected to show that the recovery remained on track.

Despite that, inflation is expected to remain below the central bank’s 2% target this year and the next:

While annual CPI inflation was expected to rise temporarily to 3 per cent around the middle of the year as a result of the reversal of some pandemic-related price reductions, in underlying terms inflation was expected to remain below 2 per cent over both 2021 and 2022.

The RBA also made comments about the exchange rate, stating that the Australian dollar has appreciated but is much weaker than it could have been without the central bank’s policy:

The Australian dollar had appreciated since November 2020 alongside the significant increase in commodity prices. Members noted that this had followed the earlier depreciation of the Australian dollar, much of which appeared to have reflected anticipation of the Bank’s package of policy measures introduced in November 2020. The Australian dollar was assessed as being lower than it would have been otherwise as a result of the Bank’s policies.

In the end, the RBA reiterated that it does not expect to raise the main interest rate from the current 0.1% level until 2024 at the earliest.
Meanwhile, the Australian Bureau of Statistics released a report on house prices, which showed that the Residential Property Price Index rose by 3.0% in the December quarter of 2020. That was a far better reading than the previous quarter’s increase of 0.8% and market expectations of a 1.9% gain. Year-on-year, house prices advanced by 3.6%.
AUD/USD fell from 0.7752 to 0.7740 as of 11:21 GMT today, while its session low was at 0.7711. EUR/AUD was up from 1.5381 to 1.5430, reaching the high of 1.5473 intraday. At the same time, GBP/AUD declined from 1.7925 to 1.7901.
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Original from: www.earnforex.com