Analysts at Nomura explained that the Reserve Bank of Australia (RBA) today again left its cash rate at 1.50%, as uniformly expected.
Key Quotes:
“The governor’s media release also read very much in line with our expectations, repeating a benign central case but sounding a little less confident on the global front and regarding local housing and funding market developments. The press release this time was also a little shorter – we may be stretching things, but this is consistent with the notion that in times of uncertainty, it is probably safer to say less rather than more.”
“While the overall tone does look somewhat less certain, the market reaction has been minimal, which fits with our sense that other market participants were also looking for some softening of tone too. We continue to pencil in two 25bp rate hikes in 2019, but continue to describe our conviction – given the current uncertain global and local environment – as being relatively low.”
For AUD/USD, we still believe that 0.74 represents “fair value” and we note that investors already appear somewhat short in AUD.”
“However, the currency continues to be used as a China and global risk proxy and a further deterioration in sentiment could see AUD, and AUD/JPY in particular, trade lower.:
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