AUD: Chances of a rate cut next week greatly reduced

Two weeks ago the market saw a September rate cut as virtually a 100% certainty, with the only question being whether it would be 25bps or 50bps. Last weeks speech by Glenn Stevens when he said that policy should remain as stable as possible in times of turmoil created some uncertainty and today’s retail sales and CapEx figures have totally changed the picture. The market is now pricing in a less than 20% chance of a rate cut next week and even that now seems too much.