RBA and Riksbank to tilt their neutral stance toward less accommodation, – BBH

Two major central banks meet in the week ahead and both the Reserve Bank of Australia and Sweden's Riksbank are likely to also tilt their neutral stance toward a little less accommodation, expects the research team at BBH.  

Key Quotes

“Through statement rather than deeds, the respective monetary authorities can downplay the likelihood that economic conditions will warrant further easing.”

“This may have more market impact in Australia, where there are some lingering ideas that rates may still be cut.  The Australian dollar is trading at the upper end of a year-old trading range.  In fact, as the first half ended, the Australian dollar is flirting with a trend line drawn off the April and November 2016 spike highs and the highs from March this year.  It is found near $0.7725.”

“The euro's price action had traced out some kind of topping pattern against the Swedish krone.  Whether it is a triple top or a head and shoulders pattern, the neckline (~SEK9.70) broke dramatically, and the initial target near SEK9.60 was approached before the weekend.  It also corresponds to a 50% retracement of this year's euro rally.  The next target is in the SEK9.50-SEK9.55 area.”