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20 Aug 2013
Hard to build sustainable AUD bullish case
FXstreet.com (Barcelona) - The RBA board minutes highlighted today that the chances of further rate cuts and $A value are strongly linked, which makes one think how much room the Aussie can recover before the RBA starts to talk up rate cuts again.
The RBA kept the easing bias today, noting the ‘Bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further’.
According to HSBC: "While the RBA has room to cut further, we still expect they may not need to. Lower policy rates should begin to gain further traction in the economy. While a lower AUD has done some of the work for the RBA."
However, the dilemma to build a sustainable AUD/USD upside case continues to be cloudy. Quoting HSBC: "Today’s RBA board minutes highlighted the outlook for the cash rate and the AUD are intertwined", which suggests even if AUD/USD recovers, the RBA might be forced, subject also to local data, to talk up rate cuts again, which leads to AUD falls as market prices further cuts.
The RBA kept the easing bias today, noting the ‘Bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further’.
According to HSBC: "While the RBA has room to cut further, we still expect they may not need to. Lower policy rates should begin to gain further traction in the economy. While a lower AUD has done some of the work for the RBA."
However, the dilemma to build a sustainable AUD/USD upside case continues to be cloudy. Quoting HSBC: "Today’s RBA board minutes highlighted the outlook for the cash rate and the AUD are intertwined", which suggests even if AUD/USD recovers, the RBA might be forced, subject also to local data, to talk up rate cuts again, which leads to AUD falls as market prices further cuts.