The focus will be on Antipodeans ahead of the RBA meeting and NZ labour market data overnight.
The RBA is expected to keep rates unchanged and highlight the improvement in the domestic data - the CPI inflation most recently and the labour market early on.
In addition, despite the worsening of the global macroeconomic conditions (most notably in China) the Australian ToT have not deteriorated significantly further. Chances are therefore that Governor Stevens and his colleagues will see little impetus for action at this stage.
The risk of course is that, an unchanged RBA with balanced outlook for policy could trigger unwarranted currency depreciation.
We therefore expect more jawboning by the RBA to keep AUD under pressure against the majors. That said, AUD could do well against NZD especially if the NZ labour market data overnight disappoints, fuelling market bets on RBNZ rate cut as soon as March.
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