Post RBA Decision

With a rate hike completely off the table, the primary focus was on housing, the labour market and the inflation outlook in its accompanying monetary policy statement.

But with the key GDP data due tomorrow it was even less likely the RBA would make any significant adjustment to previous comments.

The recent economic data, with most aggregators settling within the RBA current forecasts, appear to have calmed concerns at the Bank, well at least for now. I think the RBA is prepared to look through any soft patches in Q 1 data due in part to the transitory influences of Cyclone Debbie.

The  Australian Dollar is trading mixed with little shift in language. However, this may be more a function of today bad Q1 trade data. However, there is nothing in the statement corroborating  the markets slightly dovish lean as  there  is around 6bp of cuts price in  through to Dec (most dovish pricing this year) so the Aussie could find support

Our base view remains that the   RBA is likely to wait for further improvements in the domestic economy with the CPI print at the end of next month to be the chief agitator for a change in rhetoric. Even then, our view remains steady as  RBA is likely to remain on hold through the remainder of 2017

Overall the Australian dollar continues to recover well post Friday weaker NFP print, despite iron ore prices slumping.

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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