• RBA minutes to be released Tuesday
• Fed Presidents Williams and Mester try to dampen rate cut fever

The Australian dollar is trading quietly on Monday. In the North American session, AUD/USD is trading at 0.6696, down 0.11%. The Aussie sparkled last week, gaining 1.9% against the sagging US dollar.

The Reserve Bank of Australia will release the minutes of the December meeting on Tuesday. The RBA held the cash rate at 4.35% at the meeting, as expected. Still, the Australian dollar declined 1% on speculation that the RBA’s tightening cycle is over.

At the meeting, RBA Governor Michele Bullock trotted out the familiar message that the door remained open to further tightening, but after five straight pauses, the markets weren’t buying what Bullock was selling and have priced in a rate cut in mid-2024. The RBA has said that upcoming rate decisions will be data-dependent and that will make the fourth-quarter inflation release on January 31 a key event, as the RBA meets just one week later.

Investors will be combing through the RBA minutes, looking for additional details to help understand the Bank’s reasoning for pausing at the December meeting. It’s hard to see the central bank raising rates in February, with the economy posting a modest 0.2% gain in the third quarter and a mixed employment report in November, as job growth was solid but unemployment rose higher.

The US dollar has been struggling since last week’s Fed meeting when Fed Chair Powell all but declared an end to the tightening cycle as he penciled in three rate cuts in 2024. New York Fed President Williams and Cleveland Fed President Mester have since pushed back somewhat against rate-cut expectations, but it seems that the train has left the station, which could mean further headwinds for the US dollar.

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AUD/USD Technical

• AUD/USD tested support at 0.6697 earlier. Below, there is support at 0.6667
• 0.6732 and 0.6763 are the next resistance lines

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