SYDNEY, Dec 3 (IFR) - The RBAs decision to maintain its view of an uncomfortably high Australian dollar in todays post-meeting statement - despite the currencys 6.0% loss since October and some expectations for the central bank to tone down its AUD-related rhetoric - may reflect a desire to hedge against the risk of the AUD moving higher and/or holding at a stubbornly elevated level. That could occur if the BOJ decides to boost its massive money-printing program [ID:nL2N0JH099] and/or if the Fed surprises markets again by not tapering bond purchases in the near-term. The RBAs policy statement, overall, was mostly a repeat of its November post-meeting release with the bank maintaining that the setting of monetary policy remained appropriate, while leaving out any mention of an easing bias (as it has in recent post-meeting statements - preferring to include its “implicit” easing bias in the meeting minutes instead). The bank also reiterated that its rate cuts since late 2011 are still supporting Australias interest-sensitive spending and asset values, theres been signs of increased demand for finance by households, as well as a continued acceleration in housing and equity markets and that this should eventually support investment. Australias recent economic data has been quite encouraging with retail sales growing a further 0.5% m/m in October after a recovery in the September quarter, building approvals continuing on its strong uptrend and the business investment outlook - including for mining - much better than feared [ID:nIFR9lClb4]. However, with broader economic conditions still growing at a sub-par pace (Q3 GDP median f/c +0.8% q/q, 2.6% y/y vs. trend growth of just above 3.0% y/y) and likely to remain below-trend through most of 2014, the RBA is likely to maintain an implicit easing bias and express a preference for a weaker AUD for some time.
Posted on: Tue, 03 Dec 2013 05:47:19 +0000
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