AUD bid on Bullock, RBA minutes, Chinese yuan strength

• RBA Governor Bullock says the Bank is increasingly optimistic about the labour market

Bullock made mention that inflation will remain a crucial
challenge over the next one to two years.

This was very much evident in the minutes to the November meeting released soon after Bullock spoke:

• RBA minutes show intense focus on inflation and inflation expectations risks

Bullock differentiated between supply issues and strong underlying demand:

• “We’re going to see more potential for supply shocks…if
  you keep getting them, there comes a point where everyone just
  expects inflation to remain high and if inflation expectations
  adjust, then it’s a problem”

Said that monetary policy was already restrictive and dampening spending. RBA minutes showed the RBA is concerned about a shift in inflation expectations higher, though, which triggered the rate hike in November.

AUD moved higher on the minutes and has taken fresh impetus from the much stronger mid-rate for CNY:

• Australian dollar jumps after strong reference rate setting for onshore yuan (CNY)

Update:

            This article was written by Eamonn Sheridan at www.forexlive.com.