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2 Feb 2015
RBA might keep rates on hold – Growth Aces
FXStreet (Barcelona) - The Growth Aces Research Team anticipates RBA to keep rates on hold in tomorrow’s meeting but reiterate its comments on AUD being overvalued fundamentally.
Key Quotes
“The Reserve Bank of Australia is likely to shave a quarter point off its 2.5% cash rate at its meeting on Tuesday (3:30 GMT), because the economy is facing falling prices for many of Australia's major resource exports and a darker outlook for China. Monetary easing by many other central banks increased expectations for a rate cut by the RBA.”
“The cash rate is already at an historic low and has not been lowered since the last move in August 2013. One argument against an easing has been speculative froth in the housing markets of Sydney and Melbourne.”
“A rate cut is not our baseline scenario but the likelihood of such a move is significant. We expect the RBA to reiterate that “the Australian dollar remains above most estimates of its fundamental value”.”
“If the RBA does not cut interest rates the AUD/USD is likely to go up above 10-dma of 0.7927 or even towards 0.8000.”
“The market sees about 70% likelihood of a rate cut tomorrow. That is why the AUD/USD reaction to a cut should be less significant, but the rate may break below its 5.5-year lows at fall to 0.7700.”
Key Quotes
“The Reserve Bank of Australia is likely to shave a quarter point off its 2.5% cash rate at its meeting on Tuesday (3:30 GMT), because the economy is facing falling prices for many of Australia's major resource exports and a darker outlook for China. Monetary easing by many other central banks increased expectations for a rate cut by the RBA.”
“The cash rate is already at an historic low and has not been lowered since the last move in August 2013. One argument against an easing has been speculative froth in the housing markets of Sydney and Melbourne.”
“A rate cut is not our baseline scenario but the likelihood of such a move is significant. We expect the RBA to reiterate that “the Australian dollar remains above most estimates of its fundamental value”.”
“If the RBA does not cut interest rates the AUD/USD is likely to go up above 10-dma of 0.7927 or even towards 0.8000.”
“The market sees about 70% likelihood of a rate cut tomorrow. That is why the AUD/USD reaction to a cut should be less significant, but the rate may break below its 5.5-year lows at fall to 0.7700.”