The Reserve Bank of Australia announces rates at 0430 BST tomorrow and we expect a hold, in line with consensus and market pricing (less than 10% implied probability of a cut). February inflation came in cooler than expected, but a trimmed mean CPI at 2.7% remains too hot to deliver back-to-back cuts, ING’s FX analysts Francesco Pesole notes.
AUD and NZD are the big losers in the G10
“Remember, the February cut was followed by an inflation rebound that prompted a hawkish re-adjustment of the policy tone by the RBA. It is likely Governor Michele Bullock wants to avoid a repeat of that and will require at least another encouraging inflation print before easing policy again. Expect a cautious message today, with plenty of focus on the uncertainty generated by tariffs.”
“AUD and NZD have been the big losers in the G10 in the second half of March as pressure from Chinese yuan proxy trades intensified. We don’t see much respite in sight given our relatively pessimistic view on the US trade policy to be rolled out in April. We are still targeting a move to 0.620 in AUD/USD before we can think about calling for the bottom.”
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