Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, points out that the latest RBA Board Meeting Minutes suggest that while "there was not a strong case for a near-term adjustment in monetary policy" has been the Bank's near-term forward guidance for some time now, market participants looking for a cut on 7 May should take this sentence a little more seriously.

Key Quotes

“Some softening of the Board's perception of the labour market is what weighed on the AUD (-0.4% to $US0.714) where "Forward-looking indicators of labour demand had been mixed in recent months", a somewhat softer stance than the "strong" usually deployed to describe the labour market.”

“However, all measures of Australia's data surprise index have jumped higher in recent weeks, driven by auction clearance rates at 7m highs, exports, home loans, building approvals, retail sales and consumer confidence.”

“The RBA's base case has not changed, where "The central scenario was for further gradual progress to be made on both unemployment and inflation." Only when this is no longer the central case do they switch to an easing bias.”

“Thursday's employment (TD and mkt u-rate 5%) and next week's Q1 CPI are crucial hurdles for cementing or adjusting the RBA's central case ahead of the 9 May Statement on Monetary Policy.”

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