RBA's Kent: RBA will adjust policy if needed to meet targets
|- RBA's Kent is ignored and AUD/USD continue to consolidate.
- The focus stays on the Federal Reserve and forthcoming interest rate decision next week.
Following his speech, Reserve Bank of Australia Assistant Government Kent said in a Q/A that AUD/USD might have been higher without recent rate cuts.
Key comments:
- Global policy easing is still positive for Australia.
- Too low a likelihood of QE in Australia, long way away from that.
- Market expectations for federal reserve rate cuts should be already priced into currencies.
- RBA will adjust policy if needed to meet targets.
FX implications
As for the implications for the market, there is nothing here that is new for traders to trade from. The main focus is on yields with the forthcoming Federal Reserve interest rate decision. The price is hanging in the balance of a 25 basis point or a 50 basis point cut and AU bonds have been narrowly range-bound over the past 24 hours while the key driver has been UST price action. The 10-year yields consolidated recent levels with little data or other risk events to trade-off. The AU-US 10yr spread has moved back below -70bp to finish at -72bps. AUD/USD is flat on the Asia session so far at 0.7035 - That is off the overnight highs of 0.7057.
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