RBA Minutes In Focus

AUD/USD finished the day slightly higher but off best levels, the pair rose to highs of 0.7726 before pulling back into the close. The rate last down 2 pips at 0.7710, Australian participants will return after a market holiday yesterday.

• There are reports that the UK and Australia will sign a free trade deal in principle later on Tuesday. Elsewhere Morrison has also said his government want to try and resolve tensions with China.
• From a technical perspective AUD/USD remains weaker inside the recent range. The pair broke through 0.7675 on Jun 3 but immediately reversed the sharp move lower. The break lower though does highlight a bearish risk. A resumption of weakness would open 0.7586, Apr 13 low and 0.7532, Apr 1 low and a key support. Initial resistance is at 0.7773, Jun 2 high and 0.7813, May 18 high. A break of the latter would ease bearish pressure.
• The minutes from the RBA's June meeting will be released today, with focus on any deeper insight surrounding the well-documented tweaks to the RBA's rhetoric, which saw the Bank look to embed a greater sense of optionality ahead of its key July meeting (where it will make decisions on the future of its 3-Year yield targeting scheme and broader bond purchase plan). Q1 house price data will also hit.
• CBA remains positive on AUD this week: "AUD/USD can break above its recent 0.77‑0.78 trading range this week. There are three potential catalysts for a substantial lift in AUD this week. First, the RBA's minutes from its June meeting today (11.30am Sydney time). Second, a speech by RBA Governor Philip Lowe on Thursday titled 'From recovery to expansion'. Third, a dovish FOMC on Thursday morning. We consider a change in stance by the RBA can push AUD over 0.80 to be more in line with fundamentals. The RBA has flagged it would review two aspects of its policy stance at its 6 July meeting: its bond purchases and its yield target. If the RBA uses either opportunity this week to lay the groundwork for a policy change, AUD can jump"