Australian Dollar Climbs As RBA Minutes Signal Further Monetary Tightening In Months Ahead

The Australian dollar firmed against its major counterparts in the Asian session on Tuesday, after the minutes from the Reserve Bank of Australia's recent meeting showed that members agreed that the current level of the cash rate is "well below" the neutral rate and further rate hikes would be needed in the months ahead.

Members agreed that further steps would need to be taken to normalize monetary conditions in Australia over the months ahead, minutes from the bank's July 5 meeting revealed.

The level of interest rates was still very low for an economy with a tight labour market and facing a period of higher inflation, the minutes showed.

"Members viewed it as important that inflation expectations remained well anchored and that the period of higher inflation be temporary."

Members further noted that although short-term inflation expectations had risen with actual inflation, longer-term measures of inflation expectations were well anchored.

The aussie climbed to near 2-week highs of 0.6862 against the greenback and 0.8889 against the loonie, after falling to 0.6803 and 0.8833, respectively in early deals. The aussie is seen finding resistance around 0.72 against the greenback and 0.90 against the loonie.

The aussie edged up to 94.63 against the yen, from a low of 94.00 seen at 9:05 pm ET. On the upside, 97.00 is possibly seen as its next resistance level.

The aussie spiked up to a 5-day high of 1.4803 against the euro and near a 5-week high of 1.1099 against the kiwi, off its early lows of 1.4904 and 1.1062, respectively. The aussie is likely to challenge resistance around 1.45 against the euro and 1.12 against the kiwi.

Looking ahead, Eurozone final inflation data for June is due in the European session.

U.S. building permits and housing starts for June are set for release in the New York session.