2 Jul 2015
AUD bears - RBA expectations: lack of tension around event - Westpac
FXStreet (Guatemala) - Analysts at Westpac Global Strategy Group explained the possibility of mixed commentary from the RBA on the economy and Aussie dollar.
Key Quotes:
"As for Australia’s commodity outlook, we reiterate that we see risks on iron ore prices firmly lower over Q3, with supply set to expand and weakness in Chinese steel production warning of sluggish demand."
"In terms of the week ahead calendar risk for AUD, the RBA meeting and June labour force data won’t necessarily produce a break of the AUD/USD range of recent weeks, from the high 0.75s to mid-0.78 area."
"There is no tension over the decision on the RBA cash rate and it is likely to maintain mixed commentary on the economy and familiar language on AUD, saying further decline seems “both likely and necessary.” A range-break on AUD/USD - to the downside - seems more likely to be driven by underlying strength in the US dollar."
"A range of data indicates a solid rebound in growth in Q2, suggesting that markets are pricing in too little risk of the Sep Fed rate hike that remains Westpac’s central scenario. Instead, many investors appear to be assuming that the turmoil around Greece will provide an excuse for the Fed to remain on hold into Q4, despite Fed officials including Bullard and Fischer this week sounding unconcerned about the impact on the US."
Key Quotes:
"As for Australia’s commodity outlook, we reiterate that we see risks on iron ore prices firmly lower over Q3, with supply set to expand and weakness in Chinese steel production warning of sluggish demand."
"In terms of the week ahead calendar risk for AUD, the RBA meeting and June labour force data won’t necessarily produce a break of the AUD/USD range of recent weeks, from the high 0.75s to mid-0.78 area."
"There is no tension over the decision on the RBA cash rate and it is likely to maintain mixed commentary on the economy and familiar language on AUD, saying further decline seems “both likely and necessary.” A range-break on AUD/USD - to the downside - seems more likely to be driven by underlying strength in the US dollar."
"A range of data indicates a solid rebound in growth in Q2, suggesting that markets are pricing in too little risk of the Sep Fed rate hike that remains Westpac’s central scenario. Instead, many investors appear to be assuming that the turmoil around Greece will provide an excuse for the Fed to remain on hold into Q4, despite Fed officials including Bullard and Fischer this week sounding unconcerned about the impact on the US."