RBA easing in March or May?

12 February 2015, 08:11
Andrius Kulvinskas
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Sean Callow of Westpac, shares that the disappointing Australian jobs data has had the markets pricing in a 25bp cut by the RBA at the March meeting, with probability of easing now standing at 75% from previous 50%.

Key Quotes

“Markets are jittery about the RBA’s next move, so the jobs data saw pricing for another 25bp cash rate cut at the 3 March meeting jump from under 50% to a 75% chance.”

“The RBA’s rate cut statement last week did not include any hints on their next move.”

“Australia’s quiet domestic calendar in the week ahead won’t help markets decide on the March meeting either.”

“So the domestic story might not offer fresh compelling cause to drive AUD lower short term.”

“But with China’s data pulse a very sluggish 32% (WSURCNDP on Bloomberg) and iron ore (and oil) production strong, commodity prices should help keep a lid on AUD/USD. We expect trade with a 0.75 handle in coming days.”

“Westpac’s baseline view remains that global growth will improve in H2 2015, producing higher commodity prices and AUD – in contrast to many forecasts now doing the rounds.”

“But short term, the path of least resistance is lower.”
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