RBS sees a rate cut in April and the Australian dollar continuing to fall.
The market has become increasingly confident as the RBA meeting approaches next week that it will cut a second time this year, notes RBS.
"We agree that there is little reason for the RBA to wait...However, we doubt the RBA will rush to cut rates after April and it may not need to if the AUD falls as we expect it to against a stronger USD. We are at least watchful of divergence with Chinese capital markets, but perhaps the AUD is a better guide to conditions in China," RBS argues.
"We continue to see the AUD falling towards 0.65 this year in the context of weaker commodity prices and a stronger USD," RBS projects.
