### EASING BIAS TO REMAIN, TRADE CURVE BALL.....>

RBA: ### EASING BIAS TO REMAIN, TRADE CURVE BALL PRESENT

- The Q2 CPI print virtually met the RBA's exp. This will likely remove any

pressure that the RBA may have been feeling re: pulling the trigger again this

week. The Bank will be pleased with the recent currency developments & will want

to allow the effects of the back to back rate cuts to feed through, while

pointing the finger at the fiscal side. The recent escalation in the Sino-U.S.

trade spat introduces a curve ball to the Bank's discussions. Also worth

remembering that the RBA's SoMP/Gov. Lowe's testimony to a parliament committee

are both due Friday, the SoMP will be conditioned on 2 further cash rate cuts.

- Base Case: No change in the cash rate, with an indication that it will lower

its GDP forecasts on Friday. Likely to highlight downside risks of increase in

Sino-U.S. trade tensions, with conditional easing bias intact.

- Dovish Case: Worry that the latest Sino-U.S. trade developments present a

material downside risk, with indications that this will be reflected in Friday's

SoMP. This could also result in emphasis on a greater hurry to cut rates.

- Hawkish Risk: Hard to see any real scope for an outright hawkish surprise.