It has been a topsy-turvy week for short end interest markets. Last Monday the market had a 68% chance of a rate cut in August priced in. Then on Tuesday the RBA Minutes were released, noting that the fall in the Australian dollar would add “a little” to inflation over time. This was interpreted as reducing the chance of a rate cut at the August Board meeting. On Wednesday, the market cut the chance of a rate cut in August back to 47% i.e. erring on the side of no cut in August. By the end of last week, with the currency looking a bit more ‘perky’ and the CPI due this coming Wednesday and forecasts looking pretty benign, on Friday the market was back at pricing a 63% chance for August.
Read the full report: FX Research
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