FXStreet (Barcelona) – Dean Popplewell, VP of Currency Analysis and Research at MarketPulse, shares the key points from RBA’s monetary policy statement and further believes that the Australian central bank might wait to cut rates further till the Fed hike begins.
Key Quotes
“It was not a market surprise that RBA Governor Glenn Stevens opted to keep the bank’s rates on hold (+2%) earlier this morning. The surprise was that the market expected more easing rhetoric. Without it, the Aussie managed to rally hard from its seven-week low.”
“What transpired is that the new RBA policy outlook favors data dependence over renewed easing bias. In other words, like most central bankers that favor a weaker domestic currency or have issues with an overvalued currency, policymakers will more than ever be relying on a Fed rate hike to do most of their domestic policy lifting. Naturally, the AUD/USD (A$0.7682) saw a fair bit of volatility among the dollar majors, as traders digested the changes in the latest RBA policy stances.”
“Stevens continued with his usual rhetoric of trying to talk the currency down by insisting, “Further depreciation seems both likely and necessary.” Analysts noted that the policy outlook component of the statement was clouded by data dependency against the expectation of an outright return to an easing bias in light of the latest soft capital expenditure figures out last week.”
“The lack of a rate cut or easing bias convinced the AUD shorts to pare back existing positions (A$0.7707).”
“The RBA is likely to wait for the May cut to final filter through to the real economy. It’s only natural for policymakers to be somewhat hesitant of cutting rates too soon again, especially with developments in Australia’s “hot” property market. That’s reason enough to wait for the Fed to make the first move.”
(Market News Provided by FXstreet)