RBA minutes to provide clues on the central bank's rate outlook

The upcoming RBA June meeting minutes (Tuesday at 1:30 GMT) could provide further information on the central bank's rate outlook. Aussie could see greater support if the June meeting minutes of the Reserve Bank of Australia (RBA) reveal policymakers had not adopted an increasingly dovish outlook on monetary policy.

“The upcoming national elections certainly prevented a June cut, while August is probably inappropriate, since new economic forecasts will be discussed. The rates market is pricing a 40 percent probability of 25 basis points cut between August and the end of the year, so an earlier cut or more cuts would trigger a sharp market reaction and hurt the AUD. A first rate cut in July is our main scenario, and globally we believe that a cut of at least 50 bp is appropriate,” said Societe Generale in a report.

Tuesday’s RBA minutes is likely to have a limited impact on EU referendum developments expected to dominate market sentiment this week. The Australian government bonds slumped Monday with market sentiments remaining stronger as Brexit campaigning was suspended after the killing of a UK politician Jo Cox.