Analysts at Westpac explained that the Reserve Bank Board meets next week on March 6.
"Of course we expect there will be no change in the overnight cash rate.
We also do not expect to see any significant change in the Governor’s rhetoric from last month. The GDP Report for the December quarter - which we expect will show that annual growth has slowed from 2.8% in the year to September to 2.5% - will not print until March 7 and although the Bank will be anticipating a soft result, this is unlikely to dissuade it from its current view that GDP growth in 2018 will lift to 3.25%. Readers should be aware that Westpac has reviewed its currency forecasts and, while continuing to see an AUD low of USD 0.70 in 2019, has pushed out the timing to September 2019 from March."
"We expect to see the AUD gradually fall through 2018 and 2019 against the USD. The AUD is likely to hold around USD 0.77 to June before falling to USD 0.74 by year’s end. In 2019 it is expected to reach USD 0.70 by September and to hold around that level to year’s end. These forecasts broadly reflect our Fair Value model after making some adjustments for our own judgements particularly around capital flows that may not be fully explained by commodity prices and interest rates. The key drivers behind our views are: a fall in Australia’s commodity export prices, and an unprecedented sharp negative widening in the AUD/USD interest rate differential as US rates rise sharply. Furthermore, we anticipate a reversal of the current trend for the USD to weaken against the other majors."
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