RBA minutes released, caution ahead for the bulls

Reserve bank of Australia (RBA) minutes showed despite its recognition of recent positive data in the labor market and household sector, it is quite cautious over the economic growth. The economy added 11,666,000 jobs but the unemployment rate has recently gone up to 6.4% points. RBA is also cautious over the international development especially the fall in Bond prices and inflation expectation.

• Based on our current assessment, we expect the RBA to continue its path of easing than to change the tone. Currently the interest rate in Australia stands at 2.25% points. The central bank has lot of room for easing.

• The Australian economy is growing at 2.7% points as per latest estimate, but the growth has fallen from 4.3% points in 2012.

These developments are not very encouraging for the AUD/USD bulls. We remain bearish over the medium term.

 For shorter time frame market is trading into a small range of 250 points (0.76-0.785) and the range is getting squeezed preparing for a break out in the coming days.