RBA to maintain downward pressure on the AUD – Westpac

FXStreet (Mumbai) – The economic research team at Westpac believes that the Reserve Bank of Australian (RBA) on Aug 4 is likely to keep rates on hold, but maintain the “talking down Aussie” approach in its policy statement.

Key Quotes

“We are not expecting any surprises in the Governor’ statement. He has finally found the right approach to ‘talking down’ the Australian dollar with the language: “Further depreciation seems both likely AND necessary, particularly given the significant declines in commodity prices”. He first used that sentence in May when the AUD was around USD 0.787; followed up in June (USD 0.7682) and then in July (USD 0.744).”

“Now at USD 0.73 the AUD has certainly not fallen sufficiently for the Governor to abandon a successful strategy. Further, we suspect that the key reason behind his referring to potential further easing (“We remain open to the possibilities of further easing if that is, on balance, beneficial for sustainable growth”) in speeches is also a desire to maintain downward pressure on the Australian dollar.”

The economic research team at Westpac believes that the Reserve Bank of Australian (RBA) on Aug 4 is likely to keep rates on hold, but maintain the “talking down Aussie” approach in its policy statement.

(Market News Provided by FXstreet)