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Won Stronger, PPI Rises Again


Speculation Re: Sydney COVID Cases


Futures Off Lows, Curve Still Steeper

AUSSIE: No lasting reaction in AUD/USD post-RBA, with limited to no initial
reaction, as the Bank left rates unchanged as was universally expected.
- The decision saw the Bank modestly upgrade its GDP growth forecast for '18 &
'19, while it trimmed its longer run unemp. projection to 4.75% following the
latest labour mkt report.
- The fact that the first and final paragraphs in the statement remained
unchanged seems to be key, the uptick in GDP estimates & lower unemployment
forecast are seemingly negated by the CPI/wage outlook, with inflation to "be a
bit higher" than 2.25% in 2020 (the most recent SoMP had it earmarked at 2.25%,
could be deemed hawkish but the fact that it refers to a "bit" above shows any
tweaks in Friday's SoMP are likely to be limited), wage growth still seen as
gradual. No notable language tweaks re: housing market/external risks.
- AUD/USD $0.7218 last, Bulls target a break of $0.7259, before focusing on the
100-DMA & 23.6% of the 2018 range at $0.7269/84 to extend gains. Bears need to
break back below the 50-DMA at $0.7163 to test broken down trendline
resistance-turned-support from the Feb highs.
MNI London Bureau | +44 0203-865-3809 |