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This coming week, we’ve got the minutes of the latest Federal Reserve and Reserve Bank of Australia monetary policy meeting minutes. With the RBA recently cutting interest rates, and the Fed still unclear on whether or not it will begin tapering, these minutes could give us subtle clues as to what direction the two central banks are headed towards over the next couple of months.

Federal Reserve (Wednesday, August 21, 6:00 pm GMT)

What may have been discussed

I’m sure what everyone and his grandmama are looking out for is any discussion on when the Fed plans to taper its monthly asset purchases. A couple of months ago, it seemed like the Fed no longer had plans to cut back on bond purchasing in September and that it was looking for a January start instead.

However, in recent weeks, Fed members like Pianalto and Evans have expressed more openness to withdrawing stimulus sooner rather than later. It’s certainly a possibility that those two members brought up the idea of September tapering at the latest meeting minutes.

Also, while the sudden rise in yields took part mostly at the end of last week, keep in mind that yields have been rising in recent months. The major concern here is that if yields on 10-year bonds continue to rise and surge above 3%, it could have a direct effect on the Fed’s decision on how much to taper.

Potential effect on USD

Given the recent moves in the market, I think that if the focus of the discussion revolved around tapering, and specifically September tapering ,it could lead to a solid dollar sell-off. Take note that recently, speculation of tapering has sparked concerns if the U.S. economy would be able to support itself and in turn is bearish for the dollar.

On the flip side, on the off chance that discussions are about the rise in yields, it may give markets reason to believe that the Fed may not cut its QE program as much as initially thought, which could boost the Greenback.

Reserve Bank of Australia (Tuesday, August 20, 1:30 am GMT)

What may have been discussed

Last August 6, the RBA cut rates by 25 basis points, bringing them down to an all-time low of 2.50%. Prior to the Aussie’s rally over the past two weeks, the Australian dollar had been one of the weakest currencies across the board, as a dim outlook on the economy and speculations of a rate cut weighed on the currency.

This is what makes this week’s meeting minutes release so interesting. Word from Down Under is that the RBA may not be done cutting rates just yet. It’s quite possible that Glenn Stevens and the rest of the monetary policy board discussed just how far they want to bring down rates.

Considering all the “forward guidance” that most central banks have been implementing, any mention of “potential future rate cuts” may have intentionally been included in order to prepare the market.

Potential effect on the AUD

If there are any concrete words such as “possibility of future rate cuts”, I think it’s likely we’ll see a sell-off in the Aussie, as traders will begin positioning themselves in the market.

However, if there isn’t any mention that the central bank is looking at another rate cut, we may not see much movement take place on AUD/USD at all.