Forex Flash: RBA disappoints ultra doves – Commerzbank
FXstreet.com (Barcelona) - The RBA disappointed the untra-doves in the market writes Antje Praefcke despite cutting the key rate by 25bps to 3.0% as expected, but in its statement the bank did not sound dovish, rather neutral.
All in all, Praefcke notes that the RBA left its view on the global economy unchanged but referred to the uncertainty that the fiscal cliff in the US was currently creating.
Praefcke believes that the reasons behind the rate step are a little less obvious at the moment but the RBA made it clear that the effects of earlier measures are yet to be observed and that a further easing in the stance of monetary policy was appropriate now to "help foster sustainable growth in demand and inflation outcomes consistent with the target over time".
Praefcke suspects that the bank most probably wants to provide additional support for the weaker sectors of the economy ahead of its longer summer break while all the same time countering the strong AUD, which is stronger than expected in view of falling export prices and the weaker global outlook.
"Moreover the publication of inflation data at the end of January might finally rule out the possibility of future rate cuts. The ultra-doves amongst market participants were disappointed so that the AUD was able to appreciate despite today's rate cut. However, 1.0480-1.0500 continues to cap in AUD-USD."
All in all, Praefcke notes that the RBA left its view on the global economy unchanged but referred to the uncertainty that the fiscal cliff in the US was currently creating.
Praefcke believes that the reasons behind the rate step are a little less obvious at the moment but the RBA made it clear that the effects of earlier measures are yet to be observed and that a further easing in the stance of monetary policy was appropriate now to "help foster sustainable growth in demand and inflation outcomes consistent with the target over time".
Praefcke suspects that the bank most probably wants to provide additional support for the weaker sectors of the economy ahead of its longer summer break while all the same time countering the strong AUD, which is stronger than expected in view of falling export prices and the weaker global outlook.
"Moreover the publication of inflation data at the end of January might finally rule out the possibility of future rate cuts. The ultra-doves amongst market participants were disappointed so that the AUD was able to appreciate despite today's rate cut. However, 1.0480-1.0500 continues to cap in AUD-USD."
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