Australia: Activity is gathering momentum – TDS

Analysts at TDS point out that positive data surprises for Australian economy have been accumulating for high frequency indicators such as retail sales, building approvals, employment and commodity prices in recent months, seemingly under the radar of financial markets.

Key Quotes

“Last week’s low frequency capex report revealed a significant upgrade to non-mining investment plans for the year ahead. Does the economy still need record low interest rates?”

“Our RBA view (+25bp for May and Nov 2018) remains underpriced in the OIS strip, and AUD downside from here is limited to stronger data/rhetoric out of the U.S., as $US0.79 is close to fair value according to our new model.”