The Reserve Bank of Australia is not that worried about inflation. In their last rate decision for the year and before they take a two-month break, Phillip Lowe and co. decided to drop the reference for inflation staying low for some time. They now see inflation as “picking up gradually”.
This change of wording is significant and sent the Aussie higher. AUD/USD hit a high of 0.7653 after breaking above 0.7640. Further resistance awaits at 0.7730, followed by 0.78.
In addition, they were quite positive on employment, saying that the labor market continues strengthening, with forward-looking indicators adding to optimism about stronger growth.
What about the Aussie? Here, they did not change the regular wording. Once again, they said that further increases could weigh on the economy and inflation, but this is basically a copy-paste from the previous ones.
The Aussie was already buoyed by the upbeat retail sales report. After a few months of disappointments, October saw a robust rise in the volume of sales: 0.5% against 0.3% expected and on top of an upwards revision.
Only the current account missed expectations with a deficit of 9.1 billion, but this is only marginally lower than 8.8 billion predicted. All in all, it’s good news for the Aussie.
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