The last Reserve Bank of Australia decision until February is due at 2230 ET (0330 GMT). A final data point before the announcement is retail sales at 1930 ET (0030 GMT) but it’s unlikely to make a difference because the RBA is firmly on the sidelines.
The RBA cut rates to 2.50% in August then moved to the sidelines. The OIS market is pricing in a small chance of a cut in mid/late 2014 but the consensus is for no moves for a year.
The Australian Financial Review said the RBA’s next move will depend on how low the Australian dollar falls. With the Aussie sinking 6% since late-October, officials can be patient. Then again, jawboning tends to work best when it’s going with the momentum of the market, so Stevens could pounce.
The Nov 5 statement, reads:
The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy.
It’s tough to envision a creative way to strengthen that part of the statement but watch it closely.
Over at the Herald-Sun, Terry McCrann also laments the Australian dollar today:
The ‘best of all possible worlds’ combination would be sustained high prices for our commodity exports and a further fall, at least into the high-80s against the US dollar, preferably to the low-80s and indeed even into the high-70s…. the single most necessary structural, cyclical and policy requirement right now, is a significant and sustained fall in the Aussie.
