Was on Bloomberg TV today talking with Sara Eisen about opportunities in the AUD/USD:
The Reserve Bank of Australia’s monetary policy announcement is in just a few hours! For the second month in a row, the RBA is expected to ease but economists are divided on a 25 vs. 50bp move. Here’s a table showing how Australian data fared since the last meeting. As you can see, weakness all around particularly in consumer spending, employment and activity – definitely not good news!
The Reserve Bank of Australia is gearing up to cut interest rates this evening. The market is currently pricing in 32bp of tightening which means that investors expect the central bank to reduce rates by a minimum of 25bp. 50bp is a possibility but given some signs of improvement in Australia’s economy (jobs and construction/services), I expect a more moderate move. Here’s a table comparing how economic data has fared since the last monetary policy meeting on April 3rd.
RBA meeting coming up. Here’s a table on how the Australian economy performed since the last monetary policy meeting in Feb. As you can see, there has been as much improvement as disappointment but the pullback in manufacturing and service sector activity is particularly worrisome. Market is pricing in 50bp of additional easing from the RBA this year and based on recent data, the RBA will need to remain dovish
The New Year has begun and it is important to see what the market is pricing in for central banks this year. As you may know, central bank rate hike expectations change often but as of last week, most central banks are expected to keep monetary policy unchanged in the coming year but one is expected to ease aggressively. Find out who below!
Federal Reserve – No Changes in 2012
European Central Bank – Possible 25bp Cut before Year End
Bank of England – No Changes in 2012
Bank of Canada – No Changes in 2012
Reserve Bank of Australia – Aggressive Rate Cuts this Year, 25bp by March!
Reserve Bank of New Zealand – No Changes in 2012
And here are the details!