/VIEW: RBC note that "high frequency data in....>

RBA: /VIEW: RBC note that "high frequency data in China have disappointed in

recent months with a loss of momentum in activity emerging. Amid tighter credit

conditions some policy easing has already occurred with the likelihood that more

will be delivered. Chinese policy settings that are moving in the opposite

direction to the G7 add an interesting dynamic to the RBA debate." They question

whether it could trigger some speculation that the RBA's next move will not be

up given AU's leverage to China and higher beta? Although they deem this

"unlikely at this juncture given that PBOC action is in response to a moderation

in activity/tighter credit conditions (rather than a sharp shock). It may,

however, keep the RBA on the sidelines for longer although we note that Chinese

policy action is generally effective and should ultimately support activity

despite adding to longer term imbalances. Nevertheless, we think the market has

largely overlooked Chinese developments and is only beginning to focus on these

dynamics prompted by a PBOC that failed to follow the Fed last week. This

suggests some support to front-end AU and outperformance against the dollar bloc

in the coming months."