Prashant Newnaha, Senior Asia-Pacific Rates Strategist, provide his thoughts on how to trade the Reserve Bank of Australia’s (RBA) cash rate announcement due on Tuesday at 0330 GMT.
Key Quotes:
“TD expects the RBA to keep the cash rate on hold at 0.75% with the Bank reinforcing that it is prepared to ease monetary policy further if needed.
Of more interest will be a preview of the Bank’s key forecasts. These will be fully revealed on Fri, 8th Nov when the Statement on Monetary policy (SoMP) is released.
Levels for the AUD, TWI and Brent are largely unchanged from the Aug SoMP and we expect only mild downward revisions to 2020 GDP. There is little need to tinker with unemployment or CPI forecasts. This would be consistent with the RBA’s ‘gentle turning point’ narrative.
The GDP partials would need to be weak for a Dec RBA cut but Gov Lowe indicated at the IMF, 18th Oct that more cuts could be possible but “I wouldn’t assume it”.”
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