RBA: No fireworks offered – RBC CM

Sue Trinh, Head of Asia FX Strategy at RBC Capital Markets, explains that as universally expected, the RBA left the cash rate at 1.5% following its March board meeting.

Key Quotes

“Not surprisingly, the statement contained an upbeat tone, consistent with recent communication and a central bank content with current policy settings. Our AU economists continue to think that the risk of further easing remains, especially when the housing construction cycle turns, the most recent tightening in lending standards/lift in rates tempers lending, and domestic demand stays tepid.”

“AUD was bid ~50 pips from its lows into the statement and has so far held its gains. There is particular focus on AUD/NZD, which remains on a tear. The rally in the cross has taken it up to a confluence of key resistance at the 200wma, which comes in at 1.0884, and the 61.8% fibo retracement of the 1.1334–1.0238 selloff March–September 2016, which comes in at 1.0915.”