AUDUSD: RBA MINUTES - NEUTRAL & NO COMMITMENT TO FURTHER ACTION
Minutes were neutral with little hints to further action, much of which inline with the SOMP - if anything it was on the hawkish side given they expect "inflation to be improved by easing" which infers they think policy stable at 1.50% might be sufficient. Though they did go on to say "AUD$ rise could cause complications" though it was kept to a very limited sense (mining industry) and it certainly didnt suggest further easing was on the horizon if it persists.
So Aussie from here, with the continued lack of fwd guidance from the RBA i see higher, as posted several days ago - given the 6-9m trend which looks to be yield seeking given the largest economies have slipped into negative rates (ECB, BOJ) and the BOE soon to follow (plus FOMC seem to have adopted a much flatter hike trajectory) thus i expect this bullish sentiment to continue to put topside pressure on aussie (particularly as the RBA have offered little reason for speculators to stay away) as investors continue to seek carry.
Trading Strategy: Bullish - Buy Kiwi and Aussie @Market - careful of US Data.
0.773 and 0.779 (0.73 kiwi) look to be the next targets higher - risks to the view are obviously a firming USD through data improvement (given this is the Feds biggest mandate for future hikes), but given the recent data environment this seems unlikely, where i expect CPI today to miss too given retail sales and PPI (CPI Leading indicators) missed heavily last week - this should cause USD STIRs to sell-off again, push rate hopes for sept/ dec back lower and USD weaker + the presidential election i hear is becoming a somewhat constant drag on the USD, even if the rate expectations sell-off subsides.
Kiwi has slightly more fwd guidance from the RBNZ with Oct/ November cut on the cards - whilst this may seem encouraging remember kiwi rates trade at 2.0% still vs 1.5% aussie which is a 50bps differential - not to mention that being 200bps+ vs rest of G10.. so kiwi topside is likely expected even though there was some average further monpol suggested as kiwi rates have to come down quite aggressively until they are even at par with aussie, let alone not the no.1 yield currency or closer to the average in G10.. until this point the antipodes will continue to be chased higher imo as investors seek easier yields.
RBA Minutes Highlights:
-RBA MINUTES: AT AUGUIST MEETING JUDGED PROSPECTS FOR GROWTH, INFLATION WOULD BE IMPROVED BY EASING
-RBA MINUTES: BOARD SAW DIMINISHED RISKS FROM HOUSING DEBT, RISING HOME PRICES
-RBA MINUTES: ROOM FOR STRONGER ECONOMIC GROWTH GIVEN INFLATION TO REMAIN LOW FOR SOME TIME
-RBA MINUTES: HOUSE PRICES, AUCTION RATES, MORTGAGE LENDING POINTED TO COOLING MARKET
-RBA MINUTES: RISING A$ COULD COMPLICATE TRANSITION FROM MINING BOOM
-RBA MINUTES: FORWARD INDICATORS OF JOBS GROWTH POINTED TO STEADY UNEMPLOYMENT IN COMING MONTHS
-RBA MINUTES: CONSIDERABLE UNCERTAINTY ABOUT MOMENTUM IN LABOUR MARKET, INFLATION OUTLOOK
-RBA MINUTES: GDP GROWTH LIKELY TO BE MORE MODEST IN Q2, AFTER STRONG Q1
-RBA MINUTES: UNEMPLOYMENT EXPECTED TO DIP ONLY SLOWLY TO 5.5 PCT BY 2018, LEAVE SLACK IN MARKET
-RBA MINUTES: SUPPLY OF NEW HOMES TO KEEP RENT INFLATION AT LOW LEVELS
-RBA MINUTES: PIPELINE OF HOME BUILDING AT VERY HIGH LEVELS, RISK OF OVERSUPPLY IN SOME MARKETS
-RBA MINUTES: REASONABLE CHANCE OF FURTHER STIMULUS GLOBALLY IMPACTING ON CURRENCIES
-RBA MINUTES: CHINA STIMULUS SUPPORTING GROWTH THERE, BUT UNCERTAINTY OVER LONGER-TERM OUTLOOK
Full Minutes - www.rba.gov.au/monet...2016/2016-08-02.htmla
So Aussie from here, with the continued lack of fwd guidance from the RBA i see higher, as posted several days ago - given the 6-9m trend which looks to be yield seeking given the largest economies have slipped into negative rates (ECB, BOJ) and the BOE soon to follow (plus FOMC seem to have adopted a much flatter hike trajectory) thus i expect this bullish sentiment to continue to put topside pressure on aussie (particularly as the RBA have offered little reason for speculators to stay away) as investors continue to seek carry.
Trading Strategy: Bullish - Buy Kiwi and Aussie @Market - careful of US Data.
0.773 and 0.779 (0.73 kiwi) look to be the next targets higher - risks to the view are obviously a firming USD through data improvement (given this is the Feds biggest mandate for future hikes), but given the recent data environment this seems unlikely, where i expect CPI today to miss too given retail sales and PPI (CPI Leading indicators) missed heavily last week - this should cause USD STIRs to sell-off again, push rate hopes for sept/ dec back lower and USD weaker + the presidential election i hear is becoming a somewhat constant drag on the USD, even if the rate expectations sell-off subsides.
Kiwi has slightly more fwd guidance from the RBNZ with Oct/ November cut on the cards - whilst this may seem encouraging remember kiwi rates trade at 2.0% still vs 1.5% aussie which is a 50bps differential - not to mention that being 200bps+ vs rest of G10.. so kiwi topside is likely expected even though there was some average further monpol suggested as kiwi rates have to come down quite aggressively until they are even at par with aussie, let alone not the no.1 yield currency or closer to the average in G10.. until this point the antipodes will continue to be chased higher imo as investors seek easier yields.
RBA Minutes Highlights:
-RBA MINUTES: AT AUGUIST MEETING JUDGED PROSPECTS FOR GROWTH, INFLATION WOULD BE IMPROVED BY EASING
-RBA MINUTES: BOARD SAW DIMINISHED RISKS FROM HOUSING DEBT, RISING HOME PRICES
-RBA MINUTES: ROOM FOR STRONGER ECONOMIC GROWTH GIVEN INFLATION TO REMAIN LOW FOR SOME TIME
-RBA MINUTES: HOUSE PRICES, AUCTION RATES, MORTGAGE LENDING POINTED TO COOLING MARKET
-RBA MINUTES: RISING A$ COULD COMPLICATE TRANSITION FROM MINING BOOM
-RBA MINUTES: FORWARD INDICATORS OF JOBS GROWTH POINTED TO STEADY UNEMPLOYMENT IN COMING MONTHS
-RBA MINUTES: CONSIDERABLE UNCERTAINTY ABOUT MOMENTUM IN LABOUR MARKET, INFLATION OUTLOOK
-RBA MINUTES: GDP GROWTH LIKELY TO BE MORE MODEST IN Q2, AFTER STRONG Q1
-RBA MINUTES: UNEMPLOYMENT EXPECTED TO DIP ONLY SLOWLY TO 5.5 PCT BY 2018, LEAVE SLACK IN MARKET
-RBA MINUTES: SUPPLY OF NEW HOMES TO KEEP RENT INFLATION AT LOW LEVELS
-RBA MINUTES: PIPELINE OF HOME BUILDING AT VERY HIGH LEVELS, RISK OF OVERSUPPLY IN SOME MARKETS
-RBA MINUTES: REASONABLE CHANCE OF FURTHER STIMULUS GLOBALLY IMPACTING ON CURRENCIES
-RBA MINUTES: CHINA STIMULUS SUPPORTING GROWTH THERE, BUT UNCERTAINTY OVER LONGER-TERM OUTLOOK
Full Minutes - www.rba.gov.au/monet...2016/2016-08-02.htmla
