Forex Flash: RBA to provide no material breakthrough in the AUD

Forex Flash: RBA to provide no material breakthrough in the AUD

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Forex Flash: RBA to provide no material breakthrough in the AUD - UBS

FITITOL--> FXstreet.com (Barcelona) - The RBA decision is the key event for the Asia session and according to UBS FX Analyst Geoffrey Yu, the market is now expecting a 25bp cut to 4% but only one more follow-up in June, as opposed to the additional 100bp over the next 12m currently priced.

"As much as the market remains tentative on the AUD and the commodity bloc in general, current conditions may yet prove conducive for such assets to recover merely on a tactical basis. Positioning is relatively light, and growth expectations have generally come down, which provides more scope for surprises to the upside" Geoffrey notes.

UBS Analyst adds: "Another drag on the AUD may also be US monetary policy - which appears to be going nowhere but that in itself is enough to deter anti-debasement trades, which have benefitted the AUD throughout the last few years. Nonetheless, we don't see any material breakthrough in the AUD barring a turnaround by the RBA. Given the external risks at this s tage and the weaker Q1 CPI report, this is somewhat harder to envisage."