Forex Flash: RBA signals towards October Board decision – NAB

By
A A A
Share |

FXstreet.com (Barcelona) - According to Peter Jolly, Global Head of Research at NAB, "The RBA chatter this week implies the odds of rate cuts have risen significantly, however the timing remains uncertain though - the short game is the October Board decision." This week's September Board Minutes implied that a persistently high AUD and lower commodity prices continues to be problematic.

"Though there are still a few weeks to go, however at this juncture their deviation is not so large, nor the broader economic data sufficiently weak, to justify an immediate rate cut." Jolly adds. The long game for Australia is that with the terms of trade having peaked, and now falling, structural forces driving the Australian economy are shifting - in a negative direction.

In particular, "a lower AUD trade weighted index ( TWI ) will be a key factor for the Australian economy to keep growing beyond the investment phase of the mining boom - likely to peak 12-18 months from now." The extent to which the AUD TWI will need to fall will depend on how deep the terms of trade correction is, though this is still unclear.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Forex and Currencies

Referenced Stocks: TWI

FXstreet.com

FXstreet.com

More from FXstreet.com:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

89,970,926
  • $16.15 ▲ 0.12%
77,131,582
  • $58.94 ▼ 1.31%
67,336,935
  • $26.56 ▲ 1.68%
48,814,124
  • $86.20 ▲ 0.02%
47,526,126
  • $23.21 ▲ 0.78%
44,660,424
  • $23.91 ▲ 6.36%
38,799,699
  • $4.289 ▲ 4.36%
36,199,890
  • $40.01 ▼ 0.97%
As of 4/17/2014, 04:07 PM