RBA too optimistic about the economy - Westpac

Sandeep Kanihama FXStreet Contributor

According to Sean Callow, analyst at Westpac, even though the RBA has cut its growth forecasts in the Feb SoMP, but in their view, they are still too optimistic.

Key Quotes

“As the housing downturn deepens, the pressure on the highly indebted consumer will grow, while the fall in residential construction is likely to be deeper than previously thought. Westpac Economics has cut its growth forecast to just 2.2% in 2019 and 2020, which is low enough to lower interest rates.”

“Westpac now expects the RBA to cut the cash rate in Aug and Nov 2019. This forecast rattled AUD/USD, knocking it down 0.6c. Yet global factors are somewhat supportive for the Aussie.”

“CNH is the strongest Asian currency over the week as the structure of a US-China trade agreement is revealed. This is very helpful background for AUD, as is the resilience of key commodity prices such as iron ore and coking coal. Barring a hawkish surprise from Fed chair Powell’s semi-annual testimony, AUD/USD should probe the upper end of this month’s ranges.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions

Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.