Overnight the main focus was on Australia. According to the latest central bank minutes the AUD stays above most estimates of fundamental value and a lower currency is needed for the economy as a further sustained fall would lift growth and inflation. In addition it was stressed that the board discussed the case for waiting until March to cut rates. This suggests that there is only a low risk of them considering lowering rates anew next month
However, considering the fact that the AUD remains too high regardless of the RBA’s more dovish policy stance, monetary conditions are still regarded to be too tight. This indicates that the easing cycle unlikely reached an end unless incoming data points to a more sustainable recovery.
We remain short AUD/NZD from 1.0650 targeting 0.98.
However, considering the fact that the AUD remains too high regardless of the RBA’s more dovish policy stance, monetary conditions are still regarded to be too tight. This indicates that the easing cycle unlikely reached an end unless incoming data points to a more sustainable recovery.
We remain short AUD/NZD from 1.0650 targeting 0.98.
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