Aussie higher against the US dollar following Reserve Bank of Australia minutes

Australian dollar climbed for a second day in a row against the greenback on Tuesday, after the release of the minutes of the recent RBA meeting, while the US dollar was put under pressure ahead of Ben Bernankes testimony to Congress tomorrow.

AUD/USD reached a session high at 0.9193 at 5:59 GMT, the highest point since July 11th, after which consolidation followed at 0.9181. The cross was likely to receive support at July 15th low, 0.9036, while resistance was to be met at July 11th high, 0.9306.

The minutes after Reserve Bank of Australias meeting on July 2nd revealed that the observed decrease in the value of the Australian dollar, following the most recent interest rate cuts, meant only one thing, an appropriate monetary policy. Inflationary prospects were “slightly higher”, because of the recent decline of the national currency, but still could provide some scope for further easing, if demand was in need of more support.

The Aussie gained positions after investors diminished their bets that a new interest rate cut was on the way at the central banks next meeting. RBA reduced lending costs by 2 percentage points to 2.75% in the end of 2011 in order to spur growth in all the sectors of Australian economy.

“There were some marginal shifts in the RBA’s language acknowledging the potential impact of the currency’s decline on its inflation outlook,” said Robert Rennie, the chief foreign-exchange strategist at Westpac Banking Corp. (WBC) in Sydney, cited by Bloomberg. “There’s an argument to suggest we’ve gotten far too bearish on the Aussie. If you’re sitting short Aussie off the lows you’re probably feeling a bit nervous and that’s really why we’re seeing a bounce.”

Meanwhile, in the United States, FED Chairman Ben Bernanke is expected to deliver his semi-annual monetary-policy testimony on July 17-18th. He said in June that the central bank may begin to taper its 85 billion USD in monthly asset purchases by this years end and exit the stimulus program in mind-2014, if US economic growth meets policymakers’ objectives.

Elsewhere, Australian dollar moved higher against the euro, with EUR/AUD cross decreasing by 0.79% to 1.4244.

Ultimately, the Aussie dollar has decreased by 9.1% during the past three months, the worst performing currency among the 10 developed nation currencies, tracked by Bloomberg Correlation Weighted Indexes.