- Long a modest (not large) amount of AUD/USD at 0.9460.
- Market expectations for RBA today : 25 bp rate hike is 74% priced in OIS market so some room for disappointment if RBA does not deliver.
- Limit order to add to long position below in event of no hike. Remember its still 4.50% vs 0% carry.
- If hike, no action. Ride long.
2 comments:
Paid 0.9600
From Deutsche Bank analyst :=
With a rate hike 70-75% priced today's announcement was a clear surprise to the market (and to us), and as actions speak louder than words, this is the key message on the day. Statement does read hawkishly, especially the line that "If economic conditions evolve as the Board currently expects, it is likely that higher
interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target. " But does seem that as "overall credit growth is quite subdued at this
stage" they have taken opportunity to sit back and see how things evolve, so 17bp rally in second bill, fall in AUD/USD from 0.9670 to 0.9605 seems appropriate, but given clear tightening bias do not think it changes larger AUD outperformance story.
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