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3 Jun 2014
RBA in focus with mixed signals - FXStreet
FXStreet (Guatemala) - Ivan Delgado, head of Asian Editors noted that the RBA is due to publish their policy decision at 4.30GMT and gave an in depth analysis.
Key Quotes:
“While there is no changes expected in the record low 2.5% rate, there will be plenty of attention on the accompanying statement”.
“During the course of 2014, the RBA meetings have been characterized by a progressive reinforcement of the neutral bias”.
“There is some market talk that today, the central bank may struck a more dovish tone amid falling consumer confidence, housing sales slowing down, the index of commodity prices declining and disappointing retail sales. These factors have led some market commentators to speculate that the RBA may also step up its verbal campaign against the Australian Dollar”.
“However, in the last month, the RBA has also received encouraging positive inputs that suggest the Australian economy is in the right track, from improving employment conditions, to brighter outlook on capital spending and activity picking up in China”.
“The RBA has been gradually moving away from jawboning the currency since early 2014, thus seems safe to assume that speculating on an increased risk of jawboning based on falling commodity prices alone is debatable, to say the least.”
“There is little correlation seen this year between the two parameters, which suggests that the RBA's softer jawboning approach towards the AUD has to do more with other factors”.
“Only when/if evidence is gathered that the economy is stalling and/or house prices/sales cool down, currently a risk to increase rate hike expectations, will the RBA return with more confidence to struck a more-dovish tone. Until then, expect little changes in rhetoric”.
“The Aussie price action in the lead up to the RBA seems to be giving mixed signals, with last week's rise above the 0.93 greeted by steady selling at the beginning of this new week”.
“The latest decline in the AUD, which saw speed picking up after a disappointing building permits print yesterday, has market commentators thinking that some of the dovish expectations for today have already been priced into the market, which is hard to tell, especially when the context price is trading in is still one in which a short term bias can still not be defined”.
Key Quotes:
“While there is no changes expected in the record low 2.5% rate, there will be plenty of attention on the accompanying statement”.
“During the course of 2014, the RBA meetings have been characterized by a progressive reinforcement of the neutral bias”.
“There is some market talk that today, the central bank may struck a more dovish tone amid falling consumer confidence, housing sales slowing down, the index of commodity prices declining and disappointing retail sales. These factors have led some market commentators to speculate that the RBA may also step up its verbal campaign against the Australian Dollar”.
“However, in the last month, the RBA has also received encouraging positive inputs that suggest the Australian economy is in the right track, from improving employment conditions, to brighter outlook on capital spending and activity picking up in China”.
“The RBA has been gradually moving away from jawboning the currency since early 2014, thus seems safe to assume that speculating on an increased risk of jawboning based on falling commodity prices alone is debatable, to say the least.”
“There is little correlation seen this year between the two parameters, which suggests that the RBA's softer jawboning approach towards the AUD has to do more with other factors”.
“Only when/if evidence is gathered that the economy is stalling and/or house prices/sales cool down, currently a risk to increase rate hike expectations, will the RBA return with more confidence to struck a more-dovish tone. Until then, expect little changes in rhetoric”.
“The Aussie price action in the lead up to the RBA seems to be giving mixed signals, with last week's rise above the 0.93 greeted by steady selling at the beginning of this new week”.
“The latest decline in the AUD, which saw speed picking up after a disappointing building permits print yesterday, has market commentators thinking that some of the dovish expectations for today have already been priced into the market, which is hard to tell, especially when the context price is trading in is still one in which a short term bias can still not be defined”.