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- AUD: Trading The RBA – Views of the Major Banks
AUD: Trading The RBA - Views of the Major Banks
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Loading...Credit Agricole: RBA on hold; to continue with its FX rhetoric. The RBA will leave rates on hold and after upgrading its rhetoric to be more upbeat on global and local growth last month, in line with its forecast revision fo rthe SoMP, the RBA is not likely to change its rhetoric so soon again. Indeed, the RBA will continue to indicate a reluctance to cut or raise rates. While RBA Governor, Philip Lowe, recently said that he would like the currency to be lower, he also said that it is hard to say that the currency is fundamentally overvalued. So the RBA is likely to continue with its rhetoric that currency appreciation complicates the rebalancing of the economy.
BofA Merrill: No change this week but next move in rates likely up in 2018. Now we see a more compelling case for the RBA to begin normalizing policy next year taking into account stronger-than-expected GDP data and improved economic prospects. There has been a notable change in tone from the RBA this year as downside risks have abated. The Bank's confidence that the GDP would rebound from a weak reading in Q3 has been justified. We now see growth moving above trend into 2018 and look for inflation to get back into the target band faster than previously thought. So we have penciled in the start of the move to normalize policy in Feb and August 2018, that would unwind the two rates cuts seen over 2016. However, it is too early to expect any guidance from the Bank that a shift in bias is imminent when the board meets this week.
Barclays: RBA on hold;AUD vulnerable to a correction in equities. Against the backdrop of a strong bounce-back in growth, higher commodity prices and relatively beginning inflationary pressures, we expect the RBA to keep rates unchanged on Tuesday. Considering that RBA Governor Lowe sounded more confident about the domestic economic outlook and has signalled that the bank remains comfortable staying on hold in his recent speeches, we believe that the RBA statement will neither display urgency to ease further nor signal a shift to a tightening bias. We think the key downside risk for the AUD in the near term will likely come from a correction in US equities or iron ore prices.
ANZ: RBA policy bias is likely to remain unmoved. There has been a lot of new information for the RBA to absorb since its last board meeting, and while much has changed, its policy bias is likely to remain unmoved as the balancing act becomes ever more challenging. On the more hawkish side of the ledger we have seen some improvement in the growth pulse, a decent rise in household consumption, a fall in the savings rate and a re-acceleration in the housing market - particularly in Sydney. however, this was offset by further disappointment on the wages front - an unwelcome development in an environment where inflation pressures are already notably absent.
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