2 May 2016
RBA in a tight spot with underlying inflation collapsing - TDS
Research Team at TDS, notes that the RBA claims that the rising exchange rate "complicated" the economic transformation away from mining and towards services.
Key Quotes
“And while employment, sentiment and key commodity prices remain firm, the RBA is in a tight spot with underlying inflation collapsing to 1.5% in Q1. Do they cut now or later? We say sit tight. The budget is unlikely to be austere, but will do enough to ensure the AAA/stable rating remains intact.
AUD topped $US0.784 via delayed and diluted Fed hikes, a surge in risk appetite and a commodity price revival, and so we have upgraded our 2016 AUD projections despite the recent slide to $0.76. The market is net long now but likely to trim as the RBA could be forced to cut as soon as next month. China risks appear low just now but we remain a headline away from a return to market volatility.”
Key Quotes
“And while employment, sentiment and key commodity prices remain firm, the RBA is in a tight spot with underlying inflation collapsing to 1.5% in Q1. Do they cut now or later? We say sit tight. The budget is unlikely to be austere, but will do enough to ensure the AAA/stable rating remains intact.
AUD topped $US0.784 via delayed and diluted Fed hikes, a surge in risk appetite and a commodity price revival, and so we have upgraded our 2016 AUD projections despite the recent slide to $0.76. The market is net long now but likely to trim as the RBA could be forced to cut as soon as next month. China risks appear low just now but we remain a headline away from a return to market volatility.”