Via eFX, what to except from the RBA today from 10 banks:
Goldman:
- We expect rates on hold (Cash Rate Target at 2.50%, in line with consensus). We will be looking for signs that the RBA is more convicted on the non-mining recovery and/or more worried about commodity prices, the AUD, and external risks.
Barclays:
- The RBA Board meets on Wednesday (consensus: rates unchanged at 2.5%), but we do not expect much of a surprise, with the policy rate likely to be held steady at 2.5% and the forward guidance of a period of stable rates retained.
- Instead, the market will eagerly await announcements on macroprudential measures for housing investments by the banking regulator APRA after the Murray review into the financial system is released (expected on 29 or 30 November).
- The latest RBA data show an increase in household gearing to a fresh record of 181% of annual income, led by investor debt, raising the chances of macroprudential rules to curb investor demand.
Nomura:
- We think the statement will continue to suggest that the RBA is not considering any changes to its policy stance and will very likely reiterate that “the most prudent course is likely to be a period of stability in interest rates.”
- We continue to believe that the RBA will keep monetary policy unchanged until mid-2015.
- We believe that, despite the weaker AUD on the month, the RBA is also likely to emphasise that AUD “remains high by historical standards, particularly given the further declines in key commodity prices in recent months” and that “it is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
- With the FOMC expected to continue to signal that policy normalisation stays on track and commodity prices remain weak, we continue to believe that AUD/USD should continue drift lower in coming months, as the currency continues to realign to weaker commodity prices.
Credit Agricole:
- Nobody expects an RBA rate-shift in the coming quarter. That, however, has not prevented a move in longer dated policy expectations against the AUD with 3-month rate spreads (eg, IRZ5 – IRH5) falling swiftly in recent weeks.We expect this move to continue.
- As we have reiterated over the last month – and reinforced by RBA board member Kent this week – uncertainty surrounding Australia’s external outlook is growing. In particular softening Chinese data, and their by-product of weakening bulks prices, appears likely to weigh more heavily in investor minds during Q1.
Credit Suisse:
- We expect the RBA to remain on hold, in line with consensus expectations and market pricing (around 5bp in cuts priced).
- The statement language surrounding the AUD will again be the focus, in our view. While commodity prices have continued to come under pressure – with iron ore down another 10% since the November RBA meeting – AUDUSD and AUD TWI have fallen 1.7% and 1.3%, respectively.
- As such, our base case is that the statement language is unchanged, continuing to note that AUD remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices, with risks skewed towards a more dovish tone.
SocGen:
- The RBA will continue to talk the currency lower. If markets start to price in a higher chance of easier policy, the AUD can fall further and AUD/USD 0.80 is in sight.
Citi:
- Tomorrow’s RBA decision presents downside risk for AUD. While no change in rates is likely and it is probably too soon for the RBA to signal more explicit risk for a cut with a shift in the forward guidance, the statement could prove more dovish than that seen last time.
- With investors pricing in a peak of about 15 bps of easing by September next year, there should be scope for further AUD-negative declines in interest rate expectations on a dovish shift.
RBS:
- Comments from RBA Governor Stevens and Deputy Governor Lowe suggest that the RBA is still uncomfortable with the level of the AUD.
- After Deputy Governor Lowe said in a speech that rate cuts are still an option if needed, it is possible that the RBA makes a reference to the possibility of rate cuts this week.
- Still, we think the RBA will stick to established language on the policy rates, calling stability in rates the most prudent course.
BTMU:
- RBA quarterly statement contained the view that the AUD remained “above most estimates of its fundamental value” while it raised very slightly its inflation forecast due to currency depreciation.
- The overall message though of policy stability remains suggesting unchanged monetary policy throughout 2015. Given our relatively favourable view for China real GDP growth next year, we expect AUD/USD declines to be more limited in 2015 than in 2014.
CBA:
- RBA likely to repeat that current policy settings, ie cash rate at 2.50%, remain appropriate.
