The Reserve Bank of Australia’s (RBA) August meeting minutes provided colour around the third consecutive 50 bps hike and risks to the outlook. AUD/USD consolidates daily losses above 0.70 but the pair is set to slide below this level, according to economists at Commerzbank.

Meeting minutes confirm cautious stance of RBA

“The minutes of the RBA meeting reiterates that the RBA sees downside risks to the economy and will therefore act in a more data-dependent manner going forward. Due to high inflation and the tight labor market, it sees the need for further interest rate hikes. However, there is no predefined path for this, it said. With this rather cautious stance, the RBA offers no reason for higher levels in AUD/USD.”

“If China's economic outlook deteriorates further, this would not be good news for the Australian economy either. The move above 0.70 in AUD/USD could therefore prove to be unsustainable.”