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3 Dec 2014
RBA may cut rates next year – TDS
FXStreet (Barcelona) - The TD Securities Research Team shares the key highlights in the FX market today, while noting that Australian Q3 GDP downside signals a probable rate cut next year.
Key Quotes
“Q3 Australian GDP surprised to the downside, ramping up expectations that the RBA may need to cut rates next year. The OIS strip is placing a 78% probability the RBA cuts rates by 25bps in June and a full 25bps is nearly priced in for Sep. Front end bonds were bid, 3yrs –5.5 bps while the 10s are unchanged, the curve now 10bps steeper in the past week.”
“NZGB yields were largely unchanged, but the NZD could not fully escape the AUD’s decent.”
“The NZD is off 0.25% to US$0.7785, but did get down to as low as US$0.7767, while the AUD is just below US$0.84, -0.5%, but above the US$0.8389 lows hit a few hours after the official release. Otherwise it was a quiet day in FX, with the CAD the best performer +0.1% to US$0.8775, and the Yen unchanged at ¥119.20.”
“Commodities are mixed, gold at US$1200, copper futures off 0.6%, iron ore unchanged and Brent crude +0.4%.
Key Quotes
“Q3 Australian GDP surprised to the downside, ramping up expectations that the RBA may need to cut rates next year. The OIS strip is placing a 78% probability the RBA cuts rates by 25bps in June and a full 25bps is nearly priced in for Sep. Front end bonds were bid, 3yrs –5.5 bps while the 10s are unchanged, the curve now 10bps steeper in the past week.”
“NZGB yields were largely unchanged, but the NZD could not fully escape the AUD’s decent.”
“The NZD is off 0.25% to US$0.7785, but did get down to as low as US$0.7767, while the AUD is just below US$0.84, -0.5%, but above the US$0.8389 lows hit a few hours after the official release. Otherwise it was a quiet day in FX, with the CAD the best performer +0.1% to US$0.8775, and the Yen unchanged at ¥119.20.”
“Commodities are mixed, gold at US$1200, copper futures off 0.6%, iron ore unchanged and Brent crude +0.4%.