28 Apr 2015
RBA: Market still priced for around 2x 25bp into year end - RBS
FXStreet (Bali) - RBS Global FX Strategy Team notes that overall, the market is still priced for around 2x 25bp cuts by the Reserve Bank of Australia into year end.
key Quotes
"Rate cut expectations continue to get pared back. The probability of easing at next week’s meeting is now at 50%, down from 80% a fortnight ago."
"Although Gov. Stevens stated that a rate cut ‘will be on the table’ (for discussion) at the May policy meeting (and he speaks again tonight), it seems that a better-than-expected March employment report and a sturdy Q1 CPI print weighed on expectations."
"Levered players have reduced their short positions on AUD, but still close to record highs. We could see further short covering into next week’s policy meeting as more RBA watchers scale back their expectations."
"A full 25bp cut is now only fully priced out of the Aug’15 RBA meeting. Compared to last week, ~9bp of cuts have been priced out of Q3. Overall, the market is still priced for around 2x 25bp cuts into year end."
key Quotes
"Rate cut expectations continue to get pared back. The probability of easing at next week’s meeting is now at 50%, down from 80% a fortnight ago."
"Although Gov. Stevens stated that a rate cut ‘will be on the table’ (for discussion) at the May policy meeting (and he speaks again tonight), it seems that a better-than-expected March employment report and a sturdy Q1 CPI print weighed on expectations."
"Levered players have reduced their short positions on AUD, but still close to record highs. We could see further short covering into next week’s policy meeting as more RBA watchers scale back their expectations."
"A full 25bp cut is now only fully priced out of the Aug’15 RBA meeting. Compared to last week, ~9bp of cuts have been priced out of Q3. Overall, the market is still priced for around 2x 25bp cuts into year end."