Analysts at Westpac note that the Australia's patchy data this week left markets debating whether the next rate cut is July or August.

Key Quotes

“In Australia, we have had a wealth of information on the Australian economy. We saw a rather mixed result in the May NAB business survey, with confidence up post-election but trading conditions, forward orders and employment all soft. The Westpac June consumer sentiment was also quite patchy but overall disappointing, with the index down slightly, compared to the usual sharp bounce on a rate cut. Australian consumers seem understandably more concerned about why the RBA cut rates.”

“The RBA says it would like this to be nearer 4.5% so there is extra interest in Governor Lowe’s speech on “The Labour Market and Spare Capacity” next Thursday, two days after the RBA minutes from the June 4 meeting are released. Market pricing for a July rate cut rose to 75% as markets focused on the higher than expected jobless rate. Heightened expectations of RBA rate cuts added to the weaker price action in the Australian dollar, which hit two week lows at 0.6902 Thursday.”

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