Sean Callow, analyst at Westpac, suggests that the AUD has absorbed a great deal of information and data this week and emerged a little stronger.
“Most of the headlines were positive, with the one real negative coming from the RBA. While there was no surprise in the steady hand at 1.5% or in much of the statement, March’s reference to 3% growth in 2019 was dropped and the summary paragraph included a new reference to monitoring developments.”
“Perhaps too much was made of these tweaks and we are comfortable with our call for steady rates at the next 3 meetings, before an August rate cut. But it was enough to knock about half a cent from AUD over the day.”
“Pundits expect an election to be called as soon as this weekend, to take place in mid-May. An unofficial election campaign has really been running since the removal of PM Turnbull in Aug 2018, with some evidence that this has hurt AUD against e.g. NZD. But against the US dollar, the prospect of RBA easing seems to keep capping rallies.”
“Even after a very strong upside surprise on Australia’s Feb retail sales report, a record high trade surplus, improved China PMIs and optimistic signs from US-China trade talks, AUD/USD rallies keep faltering. The Aussie just can’t escape the burden of sliding yields.”
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