In addition to the Chinese Caixin Manufacturing PMI due out shortly, which will either confirm or deny Sunday’s modest decline in the official Mfg PMI, the Reserve Bank of Australia’s (RBA) decision (due at 2:30pm Sydney time) headlines the region’s risk events this week.
All of those surveyed expect the RBA to stand pat, which would leave its cash rate sitting at 1.50%. The minutes from the July meeting reaffirmed labor and housing markets as particular areas of interest, with both leaving many questions unanswered. The most interesting note to take from the minutes was the discussion surrounding the neutral interest rate, which some market participants deemed as hawkish, and which sent the AUD surging. However, in his most recent address last week, RBA Governor Lowe turned unexpectedly dovish and rejected this view, with Westpac suggesting that he reinforced the Bank’s ‘firmly on hold’ stance. Lowe also tried to talk down the currency, stating that it “would be better if the AUD was a bit lower”.
This was underscores by last week’s sub-consensus headline 2Q CPI print (0.2% QoQ vs. 0.4% expected) which supports the RBA’s view that domestic inflationary pressures are lacklustre, but officials may take some comfort in the slightly firmer core readings, according to analysts at ING.
This post was published at Zero Hedge on Jul 31, 2017.
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