AUD Hammered, RBA Hints at Further Rate Cuts
The Australian Dollar has fallen sharp following the release of the RBA
Quarterly Statement on Monetary Policy, in which the doors were left
wide open for further rate cuts.
Market makers pulled the
liquidity aggressively right after the event, while algo bids helped
lift the offer, after the RBA cut the inflation outlook for 2016 to 1-2%
from 2-3% previously, which is a more drastic move than expected by
most market economists.
The Australian 10-year bond yield has
come under strong pressure in response to the RBA SoMP release, with the
odds of additional rate cuts this year now increasing. The risk-off
environment has also returned post RBA, as reflected by the uptick in
the VIX and lower US 30-Year US Treasury yields. At the same time, the
Nikkei 225 has now erased all its early gains, to currently trade at
-0.8%.
