Talking Points:
- Following in the footsteps of the RBNZ last week, the RBA is likely to keep rates on hold and take on a dovish tone over in its policy statement.
- The FOMC’s June meeting minutes will underscore policymakers’ collective belief that additional tightening steps are necessary in 2018; currently, rates markets are pricing in less than a 50% chance of two more hikes this year.
- The Canadian labor market report may have greater significance in terms of upcoming central bank decisions than the US Nonfarm Payrolls report will.
Join me on Mondays at 7:30 EDT/11:30 GMT[1] for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.
07/03 Tuesday | 04:30 GMT | AUD[2] Reserve Bank of Australia Rate Decision
The Reserve Bank of Australia is expected to keep its main overnight rate on hold at 1.50% when it meets for its July policy meeting. The decision comes independent of new growth and inflation forecasts being released, but regardless of new projections, the RBA wouldn’t be in a position to raise rates anyhow. With household debt at all-time highs and financial market conditions start to tighten, the RBA seems content on staying pat for the foreseeable future: there is less than a 1% chance of a rate hike at Tuesday’s meeting, and less than a 15% chance of a hike by December 2018 – cut in half from when the RBA last met. Like the RBNZ, expect the RBA to embrace a dovish outlook in
