key event: RBA Governor Lowe speaking: China looking much more at sustainable growth path
The Reserve Bank of Australia Governor Lowe is speaking today and appearing in front of parliament's House of Representatives' Standing Committee on Economics from 2230 GMT. He has been delivering a prepared text and then will be taking questions.
- China taking financial issues more seriously.
- China looking much more at sustainable growth path.
- Energy should be a competitive advantage for Australia.
- At moment its a liability - having an effect on the economy.
- Uncertainty over power prices holding up some investment.
- Scaling up of LNG production is taking longer than expected.
- Less foreign demand from housing, particularly from China
- Would ope full employment estimates come down over time.
Key notes:
DXY: how low can you go; 85 here we come?
The US dollar is has been testing the YTD lows and down -0.61% at the end of the day having traded between a range of 88.558 - 89.004.
FED funds rate to exceed RBA rate by 112 bp’s 10 year spread to minus 30bp’s by 2019 - Westpac
Bill Evans, Research Analyst at Westpac, suggests that they have increased their likely peak in the Federal Funds rate to 2.625% in response to Congress’ recently announced spending package.
RBA: No strong case for a near-term adjustment in monetary policy - Westpac
The Reserve Bank Board next meets on March 6 and in a speech on February 8 the Governor concluded, “the Reserve Bank Board does not see a strong case for a near-term adjustment in monetary policy”, notes Bill Evans, Research Analyst at Westpac.
RBA: what are the upside risks? - Nomura
Analysts at Nomura offered a review on the latest developments in the RBA's policy and main downside/upside risks.
About the Lowe and the RBA
Philip Lowe replaced Glenn Stevens as governor of Australia’s central bank. Lowe was the Deputy Governor of the Reserve Bank of Australia, a position he held since February 2012. If the RBA is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.