24 Jul 2013
Flash: Huge day for rate markets and potentially the AUD - NAB
FXstreet.com (Barcelona) - As NAB puts it, it’s going to be "a huge day for interest rate markets and potentially the AUD" with the Australian CPI due at 1.30 GMT.
Key quotes
"The key will be the average underlying CPI measure which we and the market are forecasting to be pretty much smack bang in the middle of the RBA’s target range, at 2½%. The outcome of this release could determine whether the RBA cuts rates at the August meeting and potentially, whether there are any more rate cuts at all."
"If the outcome for underlying is well above the median forecast of 0.5%, at say 0.7% or higher, that would ring alarm bells at the RBA, suggesting the bottom on inflation has passed, before any pass-through from the AUD depreciation. A result of 0.4% or lower and the RBA would almost be compelled to cut in August. 0.5% or 0.6% are ambiguous."
"There has been little evidence of any significant lift in activity in the pipeline for the remainder of 2013. This is why we continue to expect a rate cut ahead. As of Tuesday evening, the market was pricing a 65% chance of a rate cut at the August meeting. Probably still a touch on the ‘rich’ side."
Key quotes
"The key will be the average underlying CPI measure which we and the market are forecasting to be pretty much smack bang in the middle of the RBA’s target range, at 2½%. The outcome of this release could determine whether the RBA cuts rates at the August meeting and potentially, whether there are any more rate cuts at all."
"If the outcome for underlying is well above the median forecast of 0.5%, at say 0.7% or higher, that would ring alarm bells at the RBA, suggesting the bottom on inflation has passed, before any pass-through from the AUD depreciation. A result of 0.4% or lower and the RBA would almost be compelled to cut in August. 0.5% or 0.6% are ambiguous."
"There has been little evidence of any significant lift in activity in the pipeline for the remainder of 2013. This is why we continue to expect a rate cut ahead. As of Tuesday evening, the market was pricing a 65% chance of a rate cut at the August meeting. Probably still a touch on the ‘rich’ side."