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AUD/USD finds its way above 0.71 post RBA minutes

FXStreet (Bali) - AUD/USD has found a bid tone after a few minutes of whipsawing up and down, pressing a few pips above the 0.71 mark now, following the release of the RBA minutes, in which the Central Bank noted that the decision to keep rates on hold in October was based on the firmer prospects for growth.

That said, the RBA did not discard the possibility of further cutting interest rates should conditions warrant - note the blockbuster Aus jobs last week makes this outcome much more unlikely near term-. However, since CPI in the country has taken an unexpected turn south, the doors for cuts should not be fully closed, with the RBA saying "subdued inflation may afford some scope for further easing policy."

One cannot help but develop a sense that the RBA's rhetoric is currently quite ambiguous, on one hand telegraphing that lower rates may be a possibility, while on the other hand, there are conflicting messages and indications that makes it hard to believe the Central Bank would consider further easing.

Some of these contradicting signs, supporting the hawkish camp, are: Aus employment healthier, language towards the AUD not as aggressive, noting "A$ adjusting to commodity decline boosting demand for domestic production/services, household consumption to add significantly to demand in next two years, "very Low" rates supporting household consumption and home building.

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