RBA MONETARY POLICY DECISION HIGHLIGHTS - GBPAUD AUSSIE
As expected the RBA deciced to keep the OCR unchanged at 150bps. 30D Aussie bank bills implied only a 2% chance of a cut, down from the 10% we saw several weeks ago. There were few hints as to further policy, and it certainly feels as if the calls/ rhetoric for further cuts has been dampened in recent meetings following the august reduction. As well as in recent weeks, sentiment from the insto/ macro community has also shifted towards 2017 cuts vs 2016 which was previously a consensus view.
I remain bearish on aussie crosses, as I expect another leg lower towards 1.00 for audnzd which should maintain aussie supply across currencies as I expect kiwi to be picked up a the headline G10 yield ccy. The fundamentals (inflation, growth, employment, housing) of aussie and kiwi remain very similar, but the rate differential is 25-50bps in NZDs favour thus imo its difficult to justify audnzd being worth less than parity. up here at 1.05 thus the leg lower towards 1.00 (my 1-2yr average) would realise firm cross market aussie supply.
Short aussie positioning should be taken once AUDNZD has confirmed the leg lower (e.g. this topside correction fades with some daily closes lower/ downside structure forms in lower lows/ lower highs on meaningful timeframe(s). My preferred cross is GBPAUD longs as i have discussed before I feel STG is heavily undervalued in the medium term - though this renewed brexit selling needs to be watched in the immediate term (which works nicely to give time for AUDNZD to restart on the offer). GBPAUD has structure right until 1.40 2013 lows so there is plenty of room for further GBP selling until this trade moves into uncharted territories (unlike GBPNZD which has just cracked all time lows). USD longs are on the risky side going into election & with the finger less fed.
RBA MonPol Decision:
RBA SAYS GLOBAL ECONOMY GROWING AT LOWER THAN AVERAGE PACE
- Judged Steady Rate Consistent With Growth, Inflation Targets
- Pace Of China Growth Appears To Be Moderating
- Rising A$ Could Complicate Economic Adjustment
- Inflation Expected To Remain Low For Some Time
- Australian Economy Growing At Moderate Rate
- Labour Market Data Mixed, Sees Continued Growth In Employment
- Inflation Expected To Remain Low For Some Time
- Lenders Taking More Cautious Attitude To Housing
- Large Decline In Mining Investment Being Offset By Growth In Other Areas
- Says Household Consumption Growing At Reasonable Pace But Appears To Have Slowed Recently
RBA SAYS INFLATION EXPECTED TO REMAIN LOW FOR SOME TIME
RBA SAYS PACE OF CHINA GROWTH APPEARS TO BE MODERATING
RBA SAYS JUDGED STEADY RATE CONSISTENT WITH GROWTH, INFLATION TARGETS
RBA SAYS GLOBAL ECONOMY GROWING AT LOWER THAN AVERAGE PACE
RBA SAYS HOUSEHOLD CONSUMPTION GROWING AT REASONABLE PACE BUT APPEARS TO HAVE SLOWED RECENTLY
RBA SAYS LARGE DECLINE IN MINING INVESTMENT BEING OFFSET BY GROWTH IN OTHER AREAS
RBA SAYS LENDERS TAKING MORE CAUTIOUS ATTITUDE TO HOUSINGRBA SAYS LABOUR MARKET DATA MIXED, SEES CONTINUED GROWTH IN EMPLOYMENT
RBA SAYS AUSTRALIAN ECONOMY GROWING AT MODERATE RATE
RBA SAYS INFLATION EXPECTED TO REMAIN LOW FOR SOME TIME
RBA SAYS RISING A$ COULD COMPLICATE ECONOMIC ADJUSTMENT
I remain bearish on aussie crosses, as I expect another leg lower towards 1.00 for audnzd which should maintain aussie supply across currencies as I expect kiwi to be picked up a the headline G10 yield ccy. The fundamentals (inflation, growth, employment, housing) of aussie and kiwi remain very similar, but the rate differential is 25-50bps in NZDs favour thus imo its difficult to justify audnzd being worth less than parity. up here at 1.05 thus the leg lower towards 1.00 (my 1-2yr average) would realise firm cross market aussie supply.
Short aussie positioning should be taken once AUDNZD has confirmed the leg lower (e.g. this topside correction fades with some daily closes lower/ downside structure forms in lower lows/ lower highs on meaningful timeframe(s). My preferred cross is GBPAUD longs as i have discussed before I feel STG is heavily undervalued in the medium term - though this renewed brexit selling needs to be watched in the immediate term (which works nicely to give time for AUDNZD to restart on the offer). GBPAUD has structure right until 1.40 2013 lows so there is plenty of room for further GBP selling until this trade moves into uncharted territories (unlike GBPNZD which has just cracked all time lows). USD longs are on the risky side going into election & with the finger less fed.
RBA MonPol Decision:
RBA SAYS GLOBAL ECONOMY GROWING AT LOWER THAN AVERAGE PACE
- Judged Steady Rate Consistent With Growth, Inflation Targets
- Pace Of China Growth Appears To Be Moderating
- Rising A$ Could Complicate Economic Adjustment
- Inflation Expected To Remain Low For Some Time
- Australian Economy Growing At Moderate Rate
- Labour Market Data Mixed, Sees Continued Growth In Employment
- Inflation Expected To Remain Low For Some Time
- Lenders Taking More Cautious Attitude To Housing
- Large Decline In Mining Investment Being Offset By Growth In Other Areas
- Says Household Consumption Growing At Reasonable Pace But Appears To Have Slowed Recently
RBA SAYS INFLATION EXPECTED TO REMAIN LOW FOR SOME TIME
RBA SAYS PACE OF CHINA GROWTH APPEARS TO BE MODERATING
RBA SAYS JUDGED STEADY RATE CONSISTENT WITH GROWTH, INFLATION TARGETS
RBA SAYS GLOBAL ECONOMY GROWING AT LOWER THAN AVERAGE PACE
RBA SAYS HOUSEHOLD CONSUMPTION GROWING AT REASONABLE PACE BUT APPEARS TO HAVE SLOWED RECENTLY
RBA SAYS LARGE DECLINE IN MINING INVESTMENT BEING OFFSET BY GROWTH IN OTHER AREAS
RBA SAYS LENDERS TAKING MORE CAUTIOUS ATTITUDE TO HOUSINGRBA SAYS LABOUR MARKET DATA MIXED, SEES CONTINUED GROWTH IN EMPLOYMENT
RBA SAYS AUSTRALIAN ECONOMY GROWING AT MODERATE RATE
RBA SAYS INFLATION EXPECTED TO REMAIN LOW FOR SOME TIME
RBA SAYS RISING A$ COULD COMPLICATE ECONOMIC ADJUSTMENT