First off, there is expected to be no change to the cash rate target, not even remotely.
Attention will turn to the accompanying statement. What to watch out for:
The economy is performing at a pace better than it was doing in 2013
- GDP growth surprised to the topside, but the detail was mixed
- Data for trade surplus, retail sales, and for employment in February (and also January due to upward revisions) are all better than expected
- On the other hand, sentiment (business, consumer) data has been poorer, as has housing finance.
Overall, though, I would think the RBA is more positive on developments than they have been. We could well get an upgrade in the assessment of economic growth
While inflation is not something the RBA is overly concerned about at present (despite it being towards the upper portion of their target band), house price inflation may well become an issue soon
As for the dollar – last week Stevens had the opportunity in a speech in Hong Kong to talk it down, which he didn’t do to any great extent. This may be because he was in front of an international audience; the risk is today he is a little more forthright in jawboning the AUD lower.
If he doesn’t make much of an effort to talk down the AUD there are stops just above 0.9300 that are very vulnerable to a run.
