Forex Flash: Expecting another RBA cut in Nov; Westpac cons confidence next - NAB

FXstreet.com (Barcelona) - RBA deputy governor Lowe's speech yesterday on labor market conditions acknowledged that faltering global growth prospects was key to the central bank's latest policy easing. Lowe also emphasized, as NAB Strategists note, "the role that housing and other (non-mining) building construction may need to play in order to take up the slack left by the peaking in the mining investment boom expected next year."

NAB adds: "The improvement in housing affordability implicit in lower rate looks to be part of the master plan here, with the caveat that the RBA will not want to be seen igniting a fresh housing market boom and related risk of renewed financial instability down the track." Other remarks, as NAB notes, "failed to dislodge prevailing market expectations for the November RBA meeting outcome, with a quarter point cut still discounted around 80%" the bank says, adding they are now in the dovish camp expecting a cut in November.

Today, the latest read on consumer confidence courtesy of the Westpac-MI index for October will be released. According to the Australian bank, a more positive print is expected as last week's rate cut begins to take its effect thru the economy in the survey responses, which if combined with news of rising capital city house prices "should mean some improvement on the (below par) 98.2 September reading" NAB says. If that is not the case, "November rate cut expectations could take a further turn higher and the ASUD/USD rate dip below 1.02 as a result" the bank believes.