Australia : Elections and RBA
RBA today and elections on Sunday.
Sept. 2 (Bloomberg) — The Reserve Bank of Australia will
cut interest rates within 100 days of the Sept. 7 election,
credit markets show, a boost for whoever wins office.
Traders are pricing in a 57 percent chance Governor Glenn
Stevens and his board will lower the overnight cash-rate target
by 25 basis points to a new record 2.25 percent by December,
data compiled by Bloomberg from swaps contracts show. Markets
see little chance of a cut at tomorrow’s RBA meeting.
Source : Bloomberg
“The Reserve Bank is likely to keep the cash rate on hold as it waits on the outcome of the federal election and allows its August rate cut to have its full effect.
All fourteen economists surveyed by AAP expect the RBA to keep the cash rate at the record low of 2.5 per cent when it meets later on Tuesday” Source : Business Spectator
http://www.businessspectator.com.au/news/2013/9/3/interest-rates/rba-tipped-keep-rates-steady
So much priced in and the AUD/USD holding above 0.90 this morning after breaking out of the downtrend channel yesterday. Markets are running at quite record short for spec accounts. Thus we should expect short covering into the weekend ?
Not quite as I would not underestimate the power of specs and the correlation with SHCOMP for the AUD.
My expectation is for the AUD to be resisted at 0.9040 and a drift lower in the days ahead into the cliff hanger elections which does not bode too well for market stability.
Verdict : Sell AUD target 0.8880. I know I am wrong if 0.9050 breaks.
uh oh…
FXstreet.com (Barcelona) – While an early opinion post RBA by NAB indicates that “easing bias is maintained”, the market perception on today’s statement, so far, is of aggressively buying the AUD on the fact that the RBA has removed its easing narrative from the statement’s last paragraph.
Comparison Aug statement vs Sept
August: “The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand. At today’s meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.”
September: “At today’s meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.”
As one can notice, the line “the inflation outlook could provide some scope to ease policy further, should that be required to support demand” has been omitted from the statement this time around, which indicates a slight removal of its dovish tone.
Did not break 0.9050. Fingers crossed.
🙁 think you don’t have much luck with AUD, maybe stick to EUR
Have not cut. Gonna sit for another day.
Ok. Getting out of trade. Will try again later in the week.
good decision, hope 3rd time lucky for your next AUD trade
Haha. Yes. Today again. Lets see.