AUD/USD: AUD: The last piece of the puzzle to exclude a November cut – ING

According to the strategist at ING, next week the AUD/USD pair should consolidate in the upper half of the 0.68 area. Their one month target is 0.6750.

Key Quotes:  

“As the RBA navigated these past few months of monetary easing, the market’s perception has been that two indicators were the major (if not the only) determinants of the Bank’s decisions: inflation and unemployment. For both, the RBA sets two audacious targets, 2.5% and 4.5%. However, markets have also noticed that even a slight improvement in those two gauges seems to be enough to prompt a pause in the RBA easing. The unemployment rate slowed to 5.2% from 5.3% in the September print, and this was enough to halve the implied probability (now at 18%) for a cut on 5 November.”

“Next Friday, the Q3 inflation report will be published and consensus sees the headline CPI advance from 1.6% to 1.7%. We think it will be enough to cement expectations that the RBA will stay put in November. Governor Lowe will speak on Tuesday, but we suspect he won’t diverge from his recent rhetoric before seeing the inflation numbers. This should ultimately translate in some support for the Aussie dollar, that will inevitably remain strictly dependent on the Brexit and trade talks dynamics, but may attract more interest from investors if an RBA cut is ruled out for now.”