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High bar for RBA to hike in August – TD Securities

Source Fxstreet

May 7, 2024 08:53

Analysts at TD Securities assess the Reserve Bank of Australia's (RBA) policy decisions.

AUD/USD to be pinned back below 0.6600

"The RBA left the target cash rate on hold at 4.35% as was widely expected, but the Statement and Press Conference fell short of the hawkish tilt anticipated by us and the market. The Bank's CPI forecasts for this year were lifted appreciably, setting a high bar for the Bank to hike by its August meeting. The Bank hasn't ruled out hiking, but given longer-term trimmed mean inflation forecasts were left unchanged, the implication is the RBA expects to keep the cash rate on hold for even longer. The forecasts imply the absolute earliest the RBA cuts would be Aug'25, if not later."

"Today's decision could see some profit-taking from AUD bulls on the crosses given the stretched run-up in AUD/NZD and AUD/CAD. Given RBA's lack of desire for hawkish action, we expect AUD/USD to be pinned back below the 0.66 handle, trading towards 0.64 by end June. We believe more USD strength lies ahead as the FX market is increasingly focused on inflation trends."

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US Retail Sales were unchanged at $705.2 billion in April The US Census Bureau reported on Wednesday that Retail Sales in the US were virtually unchanged on a monthly basis at $705.2 billion in April.

Source Fxstreet

The US Census Bureau reported on Wednesday that Retail Sales in the US were virtually unchanged on a monthly basis at $705.2 billion in April.

ECB's Holzmann: No reason to cut key interest rates too quickly and too strongly European Central Bank (ECB) policymaker Robert Holzmann said on Wednesday that he doesn't see a reason to cut key interest rates "too quickly or too strongly," per Reuters.

Source Fxstreet

European Central Bank (ECB) policymaker Robert Holzmann said on Wednesday that he doesn't see a reason to cut key interest rates "too quickly or too strongly," per Reuters.

ECB's Lane: Inflation has declined quicker than expected While giving a virtual guest lecture at the University of Stanford, European Central Bank (ECB) Chief Economist Philip Lane noted that while inflation has declined at a faster pace than the ECB had initially expected, policy transmission continues to lag, and tightening effects from previous rate increases continue to unfold.

Source Fxstreet

While giving a virtual guest lecture at the University of Stanford, European Central Bank (ECB) Chief Economist Philip Lane noted that while inflation has declined at a faster pace than the ECB had initially expected, policy transmission continues to lag, and tightening effects from previous rate increases continue to unfold.

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