2 Dec 2014
RBA may allow cuts to be more clearly priced in - RBS
FXStreet (Bali) - While the Fed firms up rate hike expectations, the RBA may allow cuts to be more clearly priced in, notes Greg Gibbs, FX Trading Strategist at RBS.
Key Quotes
"Key US Federal Reserve members Dudley and Fischer firmed up the outlook for the US economy and rates rising in mid-2014. This emphasizes the divergence in monetary policy after recent further easing measures taken by the BoJ and ECB."
"The RBA rates policy statement today presents a downside risk for the AUD. Even though recent Australian economic reports suggest that the non- mining sector is improving, recent RBA speeches suggest they are more ambivalent on the direction of rates."
"This may be because macro-prudential measures are expected to be proposed before year end and banks are expected to be asked to apply high minimum risk weights to mortgages."
"Furthermore, commodity prices have weakened further and will reduce Australian national income and solidify the downturn in resources investment."
"The RBA may decide to drop its assessment that a period of rates stability is prudent suggesting they are more uncertain over the direction of rates over the next six months. This would open the door for the market to build in more rate cuts and undermine the AUD."
Key Quotes
"Key US Federal Reserve members Dudley and Fischer firmed up the outlook for the US economy and rates rising in mid-2014. This emphasizes the divergence in monetary policy after recent further easing measures taken by the BoJ and ECB."
"The RBA rates policy statement today presents a downside risk for the AUD. Even though recent Australian economic reports suggest that the non- mining sector is improving, recent RBA speeches suggest they are more ambivalent on the direction of rates."
"This may be because macro-prudential measures are expected to be proposed before year end and banks are expected to be asked to apply high minimum risk weights to mortgages."
"Furthermore, commodity prices have weakened further and will reduce Australian national income and solidify the downturn in resources investment."
"The RBA may decide to drop its assessment that a period of rates stability is prudent suggesting they are more uncertain over the direction of rates over the next six months. This would open the door for the market to build in more rate cuts and undermine the AUD."