The latest cash rate decision released yesterday was somewhat of a non-event with the RBA led by new Governor Philip Lowe deciding to leave rates unchanged again at 1.5% p.a. Philip Lowe and his team noted that while current inflation and economic growth remains somewhat subdued it is moving in the right direction and current rates remain "appropriate".
It's looking extremely unlikely we'll see any further rate cuts from the RBA this year so attention really turns to the U.S Federal Reserve who have continued to suggest that their rate normalisation strategy is not yet over. What this means is a rate hike is now being factored in perhaps this month or next (despite U.S elections). Should this occur, I think we'll see a sharp drop in AUD/USD as the USD bulls jump back on the bandwagon and hence buying USD right now via Forward Cover or even an Option is your best strategy to take advantage of current rates and hedge upcoming exposures.
Stocks and commodities were mixed overnight with U.S equities retreating by about half a percent, while European stocks moved forward by around 1%. Oil continues to push higher, while iron ore prices were flat and gold retreated.
DATA RELEASES TODAY:
AUD – Retail Sales at 11.30am
GBP – Services PMI at 7.30pm
USD - Prelim ADP Jobs Numbers at 11.15pm
USD - ISM Non-Manufacturing PMI at 1.00am
AUD EXCHANGE RATES:
AUD/USD – 0.7582
AUD/GBP – 0.5961
AUD/EUR – 0.6774
AUD/NZD – 1.0563
AUD/JPY – 78.11
***Above rates are indicative wholesale rates and intended as a guide only***
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