RBA’s Lowe: Likely next move in rates is up not down, but not in near term

Dhwani Mehta FXStreet

The Reserve Bank of Australia (RBA) Governor Phillip Lowe is on the wires now, via Reuters, making a scheduled speech titled "Productivity, Wages, and Prosperity" at an Australian Industry Group event, in Melbourne.

Key Comments:

Likely next move in rates is up not down, but not in near term

Any increase in interest rates still some time away.

No strong case for a near-term adjustment in monetary policy.

If economic growth is sustained, next move in rates will be up, not down.

March qtr GDP data "bit stronger than we were expecting", consistent with the central scenario.

Despite strong GDP growth, no net increase in labor productivity over past two yrs.

Paying close attention to household finances, carefully watching consumption growth

Low wage growth leading to weak inflation in Australia, diminishing a sense of shared prosperity.

"Some pick-up" in wages growth would be a welcome development.

A return to wage increases of 3 pct or more "both possible and desirable".

Liaison program suggests faster wage growth in areas of capacity constraints.

Risk of a trade war, political development in Italy tail risks for global growth.

Increasing strains in emerging markets of Argentina, Brazil, Turkey another potential source of financial shock.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD looks firm; focus is on 0.7000

AUD/USD starts the week on a positive footing, approaching the 0.7000 hurdle helped by renewed sentiment following firmer-than-expected GDP data from China. Meanwhile, the continuation of the pair’s recovery also comes in contrast with the decent advance in the Greenback, which regains some traction followong last weeks pullback.

USD/JPY struggles near 158.00 amid hawkish BoJ, subdued USD

USD/JPY remains defensive near 158.00 in the Asian session on Monday, as the US Dollar remains depressed near a two-week low amid the recent decline in US bond yields. Furthermore, looming intervention risks underpin the Japanese Yen and weigh on the pair amid BoJ Governor Kazuo Ueda's hawkish remarks. However, Fed rate-hike bets and geopolitical uncertainties could limit USD losses and the major.

Gold drops to daily lows below $4,150

Gold builds on Friday’s retracement and slips back below the $4,150 mark per troy ounce on Monday. The better tone in the US Dollar and a decent bounce in US Treasury yields across the curve keep the yellow metal under pressure for now.

XRP struggles at support as ETF outflows and bearish momentum cloud recovery outlook

Ripple (XRP) holds slightly above $1.30 on Monday, with short-term recovery prospects fading. Strong structural resistance toward $1.40 continues to cap upside, raising the risk of further downside below $1.30.

Higher than expected inflation shakes markets: What to prepare for?

US CPI report came in stronger than expected, lifting the probability of a December rate hike higher once again. Even though Fed Chair Warsh reinforced expectations of a hold for the October’s meeting, markets now face a two-step event: a likely pause on October 28, followed by an interest rate hike on December 9.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.