AUD Bounces Back as Traders Await Fed Minutes for Guidance

The Australian Dollar (AUD) has regained some ground against the US Dollar (USD), rising from its intra-week lows on Friday. Despite this, the AUD/USD pair remains in negative territory, struggling to reach a previous support area above 0.7080.

Analysts at ING believe that the minutes of July's Federal Reserve (Fed) monetary policy meeting will not significantly impact the USD. They predict that 'a few hawkish references' may slightly nudge the dollar and short-dated rates higher, but expect the minutes to have a limited effect overall.

The AUD is being weighed down by concerns over the Middle East conflict and rising oil prices, as well as lower wage growth in Australia. Brown Brothers Harriman's Elias Haddad notes that RBA cash rate futures imply a 60% chance of one final 25bps hike by year end to 4.60%, but argues that 'the risk is skewed towards a more extended pause' due to policy already being somewhat restrictive.