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The pressure is on for the Australian dollar tomorrow as analysts are dived over whether the Reserve Bank of Australia will cut interest rates again following on from the rate cut in February.

The market is now pricing in around a 55% chance that he central bank will reduce rates tomorrow, up from around 38% before the release of disappointing capital expenditure figures on Friday.

Figures from the Australian Bureau of Statistics showed that capital expenditure dropped by 2.2%, much worse than the 1.6% that the market expected

ANZ Banking Group’s Daniel Been said the weak capex data confirms the bank’s stance that rates will be cut again tomorrow,

Guest Post by Andrew Masters from FiboGroup

“Our expectation is the RBA will cut the rates and this [the capex data]firms our belief. My expectation is it [the Australian dollar]will fall further. The domestic economy story isn’t that good and rate differentials people are earning are rapidly diminishing.” he said

ANZ’s co-head of Australian economics, Felicity Emmett, noted that businesses are sitting on the sidelines at the moment, unwilling to make the commitment to invest further funds into the economy,

“The ongoing weakness in the outlook will provide further confirmation to the [Reserve] Bank that the economy needs further stimulus,” she said

“We continue to expect another near term RBA rate cut, most probably at the March meeting.”

One figure that may spoil the party of an interest rate cut is the renewed interest in the property market brought on by last month’s rate cut, pushing annualized rates of price growth to around 10%, well above inflation and wage growth.

According Corelogic RP data, auction clearance rates in Sydney last weekend came in at 86.2% while in Melbourne the figure was equally impressive at 75.8%, marking the highest levels since 2009.

One analyst who predicts that the RBA will hold off a little longer is St George Bank senior economist Janu Chan who predicts rates will be left on hold this month as the Australian Central Bank takes a wait and see approach, especially in regards to the value if the Australian dollar and the property market.

“We think that the RBA will still want to give the economy more support, but it will prefer to wait at this meeting so it can assess developments, particularly the currency and housing markets,” she said.

To help reign in the housing bubble the Australian government plans to introduce fees for foreign nationals purchasing property and also introduce hefty fines for those who break the current investment laws.

The figures being proposed are an extra $5,000 for property up to a value of $1 million and an additional $10,000 for every additional million.

Other stringent measures to be introduced include the establishment of a register monitoring foreign nationals who buy real estate with those breaking the laws facing a possible fine up to a quarter of the value of the property and be forced to sell.

The new laws seem to target the Chinese as they snap up more properties in Australia pushing the price well above the affordability for most Australians.

Prime Minister Tony Abbott said the new measures will bring Australia into line with other countries like Hong Kong, Singapore and New Zealand, replacing other laws that were never strictly enforced.

“The idea is not to deter foreign investment, the idea is to ensure that the rules are enforced,” Mr Abbott told reporters.

More:  AUD/USD: Ideal Sell; – Goldman Sachs

In this week’s podcast, we cover  Yellen & the hike, AUD & CAD rate previews, Jobless claims vs. USD & Greek back burner

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