The minutes from the Reserve Bank of Australia’s (RBA) Nov. 7 meeting due out on Tuesday at 0030 GMT present a risk to the recent gains in the Australian dollar.
At the meeting the bank hiked the cash rate by 25bps to 4.35%, matching expectations. However, the RBA delivered a less hawkish forward guidance, stating that further tightening of monetary policy may be required.
This raises the bar for the RBA to deliver an additional rate hike, which given that markets are pricing in over a 40% probability of a hike by March 2024, leaves AUD at risk from a dovish repricing. The statement of monetary policy (SOMP) also acknowledged that policymakers considered whether to pause and thus emphasises that the bar to hike again is elevated. That said, although this is a risk to the Aussie, the current backdrop of a softer dollar remains the dominating theme across FX, which in part can limit downside in the Australian dollar.
From a technical point of view, the pair could extend gains as shown on 1H chart.