Bank of America expects the Reserve Bank of Australia to remain on hold on May 7, reversing a call for a cut. Now just 6 of 28 economists polled by Bloomberg expect a cut although the OIS market says it’s closer to 50/50.
BofA still sees the RBA lowering rates by 50 bps in the current cycle but say improving conditions, including business investment will sideline the central bank for this month.
“The case for cutting again is getting stronger, but not strong enough yet,” currency strategist Saul Eslake said.
Separately (but along the same lines), BNP Paribas suggests AUD longs at 1.0245 with a target of 1.0430 and a stop at 1.0175.
