Forex Flash: Evidence mounting for RBA to hold rates in August

Forex Flash: Evidence mounting for RBA to hold rates in August

<!--TITOL:

Forex Flash: Evidence mounting for RBA to hold rates in August - NAB

FITITOL--> FXstreet.com (Barcelona) - Australia May retail sales came much higher than expected, with sales up at 0.5% vs median forecast +0.2%. NAB Analyst Spiros Papadopoulos attributes the improvement to Clean Energy Advance payments to households, speculating that in June, "the boost will be even larger as households receive the School Kids bonus."

After the good run of domestic data in recent weeks and oon the assumption that this positive pattern continues, Mr. Papadopoulos thinks it will be hard for the RBA to find a reason to cut rates in August even if the Q2 CPI is subdued.

"Prior to the next RBA meeting we will get the June business confidence/employment/credit/building approvals/house prices and retail sales releases, and it is those releases that will determine if the rate cuts so far are sufficient for now, or if the RBA needs to cut further in August. Markets currently pricing just a 50% chance of a cut in August, down from 60% prior to the retail data" says Mr. Papadopoulos.