Andrew Ticehurst, Research Analyst at Nomura, notes that the Reserve Bank of Australia (RBA) again left its cash rate at 1.50% at today’s meeting, as was uniformly expected and its press release suggests that its core views are unchanged and much of the statement was repeated verbatim from last month.

Key Quotes

“However, most of the new additions are tilted in an upbeat direction, in our view, and our base case remains for a first rate hike in November. Today’s press release does not suggest any major revisions to forecasts in Friday’s Statement on Monetary Policy, although we still see room for some growth numbers to be trimmed slightly and inflation upgrades.”

“In terms of market strategy, we continue to believe that the front of the OIS strip has rallied too far. We have also been cautious on AUD this year; with its recent decline to around USD75.3 cents, it is now not too far from our forecast of 73-75 cents over Q2 and Q3. However, we do have sympathy for a stronger AUD/NZD, incorporating our expectation that the RBNZ will not hike until H2 2019 and current positioning data, which suggest that investors are overweight NZD.”