AUD: 60% chance of a rate cut by the RBA – BBH

By FXStreet Research Team at BBH, suggests that the divergence between prices and the technical and the Australian dollar are starker than in the Canadian dollar.

Key Quotes

“The underperformance of the Australian dollar against the Canadian dollar we had anticipated panned out, perhaps because he market is discounting about a 60% chance of a rate cut by the RBA in the week ahead. The RBA has said that inflation gives them scope to ease monetary policy is necessary.

Many apparently saw the softer than expected Q1 CPI, coupled with the strength of the Australian dollar, as making a rate cut necessary. We are less sanguine. A steady RBA could see the Australian dollar trade higher. The $0.7670 area marks the nearby ceiling, though we are beginning to hear more talk of $0.8000 over the next several weeks. A convincing break of the $0.7500 makes the bulls re-think.”
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Source:: FX Street