RBA Ahead
It was a quiet US session as investors looked ahead to seven G10 monetary policy meetings over the next ten days. Event risk lurks in other forms too with Greek Finance Minister Venizelos stressing overnight that Greece is ‘ready to activate CACs if needed’. We would not be surprised to see this scenario materialise over the coming days – investors have until Thursday to declare whether they wish to accept the bond swap offer. In the US, the ISM manufacturing report became the latest data point to surpass expectations, rising to 57.3 (cons. 56.0). Having sifted through the components of the survey our US economists have decided to keep their non-farm payrolls forecast for Friday unchanged at +190k (cons. 210k). Today the focus will be on the RBA. Our Australia economics team expects the cash rate to remain on hold at 4.25%. All 24 economists surveyed by Bloomberg agree, and we do not expect to see a major currency reaction. However, there is scope for some AUD upside if the RBA drops its easing bias. In particular we would look for any change to last month’s observation that: ‘Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy.’ Over the past 24 hours, EURUSD traded 1.3160-1.3241 and USDJPY 81.16-81.87.
Click here to read the full report: UBS Morning Adviser Asia
UBS Investment Bank