This morning´s institutional research has been thin on the
ground, most probably due to the segmented nature of this week,
with different central banks all reporting at different junctures.
Last night saw the RBA meet and hold rates again, while analysts
recommend staying short EUR ahead of the ECB meet and to be
prepared for a rate cut from the BoE.
Andrew Salter of ANZ note that last nights Q4 BoP data confirm
foreign direct investment (
) remains the only funding source for Australia's current account
deficit. He adds that in terms of the persistence of these inflows,
this is the ninth positive net FDI inflow, an outcome that has not
been matched since 1991 and writes, "We are positioned for a strong
AUD via AUD/NZD." Meanwhile Lee Hardman of BTMU meanwhile notes
that AUD strengthened overnight following the RBA's decision to
hold rates as Retail Sales improved. Karen Jones of Commerzbank
notes that the decision has seen AUD/USD collapse to 7 month lows.
Danske Bank analysts reiterate that the RBA held rates as expected,
adding that the bank looks to be in wait and see mode for now, with
Governor Stevens reiterating that the inflation outlook allows to
ease monetary further if necessary.
ING economist James Knightley suspects that despite the rise in UK
PMI, further QE will most probably follow, especially with the low
hurdle following the previous MPC vote. RBS economist Ross Walker
notes that the odds of an increase in the asset purchase facility
have been increased by weak manufacturing PMI and BoE policymaker
comments However, he adds that the odds have too been exaggerated.
RBS strategist Greg Gibbs recommends staying short EUR into the ECB
meeting, adding that overall he is slightly bemused by the ECB´s
policy approach, citing a damaging separation between financial
world interpretations and real world realities being part of the