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TD Securities note that "three out of the....>

AUSSIE: TD Securities note that "three out of the four major retail banks lifted
their key standard variable rate (SVR) by an average of +14bp over the past two
weeks. The increases are the direct result of elevated domestic funding costs.
We cannot rule out more SVR hikes if the BBSW-OIS spread remains elevated, or
widens even further heading into year-end. OIS is flat at 1.5% through to
end-2019, so the markets revert to data-watching and any RBA reaction to the
hikes. A trigger for even lower OIS pricing needs the RBA to drop the phrase
"the next move is up" for the cash rate, so the market will be hyper-sensitive
to RBA-speak (more than usual). For the AUD, higher SVRs does some of the heavy
lifting for the RBA, offering little support for AUD over the medium-term. That
should limit the scope for AUD rallies over the next few months, although the
tactical setup in the next few weeks looks much more appealing. We like fresh
longs in AUDCHF as a tactical valuation trade and think AUD should outperform
CAD in the dollar bloc over the coming weeks."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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