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30 Jun 2014
Risk RBA will step up rhetoric on AUD - RBS
FXStreet (Bali) - According to RBS FX Strategists, while no change in policy is expected by the RBA later today (4.30GMT), there is a risk that the RBA will step up their rhetoric regarding the high AUD.
Key Quotes
"The RBA decides on the cash rate target, which is largely expected to be unchanged at 2.5%. The RBA has become incrementally more dovish in its past two policy meeting statements as the rebound in broader business surveys in the second half of last year has lost momentum."
"There is a creeping fear in the market that recovery has stalled and will lose further momentum as the downturn in mining investment gathers pace. While high frequency data haven't been that weak, they are unlikely to have been strong enough to suggest output will rise above potential in the next couple of years."
"There is also a risk that the RBA steps up their rhetoric regarding the high AUD and its potential impact on wage inflation. As Australian yields have already slipped ahead of the decision, there is perhaps a reduced risk of a negative surprise for the AUD."
Key Quotes
"The RBA decides on the cash rate target, which is largely expected to be unchanged at 2.5%. The RBA has become incrementally more dovish in its past two policy meeting statements as the rebound in broader business surveys in the second half of last year has lost momentum."
"There is a creeping fear in the market that recovery has stalled and will lose further momentum as the downturn in mining investment gathers pace. While high frequency data haven't been that weak, they are unlikely to have been strong enough to suggest output will rise above potential in the next couple of years."
"There is also a risk that the RBA steps up their rhetoric regarding the high AUD and its potential impact on wage inflation. As Australian yields have already slipped ahead of the decision, there is perhaps a reduced risk of a negative surprise for the AUD."