The AUD rose higher overnight after the USD slumped in the wake of the Federal Reserve meeting minutes from earlier this month.
The record showed some board members willingness to step back from the jumbo 75 basis point (bp) hikes that have been seen at four consecutive meetings, including the last one.
This message has been telegraphed by several Fed speakers since that Federal Open Market Committee (FOMC) meeting. The market priced a 50 bp hike at the December gathering before and after this month’s meeting. It continues to do so now.
The market seems to have understood the meeting record as somewhat dovish despite very little new information emanating from them.
Nonetheless, equities went north while Treasury yields sailed south along with the US Dollar. Metal commodities generally got a boost, and this has given the Aussie Dollar an extra tailwind.
At the same time, crude oil has taken a hit and the Canadian Dollar is noticeably lower. The weakness in the Loonie was compounded by comments from Bank of Canada Governor Tiff Macklem.
This remark seemed to gain most attention: “The tightening phase will come to an end, and we are getting closer, but we are not there yet.”
That has been interpreted by the market as less hawkish than previously. As a result, AUD/CAD is approaching a two-month high above 90 cents.
Holiday conditions lie ahead today with Thanksgiving in the US and markets could be somewhat illiquid, potentially providing skittish conditions.