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2 Jul 2014
RBA increasingly uncomfortable with high AUD - Nomura
FXStreet (Bali) - According to Nomura FX Strategists, the RBA is starting to signal increasing discomfort that AUD is diverging too much from fundamentals.
Key Quotes
Overall, the RBA decision to leave the policy rate unchanged was consistent with our view that the RBA has a neutral policy stance and is unlikely to change its policy rate any time soon."
Tuesday's statement continues to show that the RBA has maintained its positive outlook on the economy, despite the expected drag from resources investment and public spending."
"However, given the continued decline in commodity prices, the RBA is starting to signal increasing discomfort that AUD is diverging too much from fundamentals."
"On the currency, the RBA reiterated that “the exchange rate remains high by historical standards, particularly given the further decline in commodity prices”, but adding “and hence is offering less assistance than it might in achieving balanced growth in the economy.” The last segment suggests the RBA is becoming increasingly less comfortable with the currency level in light of low iron ore and coal prices."
Key Quotes
Overall, the RBA decision to leave the policy rate unchanged was consistent with our view that the RBA has a neutral policy stance and is unlikely to change its policy rate any time soon."
Tuesday's statement continues to show that the RBA has maintained its positive outlook on the economy, despite the expected drag from resources investment and public spending."
"However, given the continued decline in commodity prices, the RBA is starting to signal increasing discomfort that AUD is diverging too much from fundamentals."
"On the currency, the RBA reiterated that “the exchange rate remains high by historical standards, particularly given the further decline in commodity prices”, but adding “and hence is offering less assistance than it might in achieving balanced growth in the economy.” The last segment suggests the RBA is becoming increasingly less comfortable with the currency level in light of low iron ore and coal prices."