Dollar Bloc: Testing times – ING

By FXStreet James Knightley, Senior Economist at ING, suggests that future Australian rate cuts are looking less likely, but the potential for cuts from New Zealand and Canada remain – the latter being more likely but nothing is expected this week though.

Key Quotes

“Last week’s Reserve Bank of Australia (RBA) left the cash rate unchanged at 2%, stating that while the commodity-based part of the Australian economy continues to struggle, the non-resource sector is performing well. Consequently, the RBA is of the view that there are “reasonable prospects for continued growth in the economy, with inflation close to target.”

The RBA could yet come in with more stimulus given that “low inflation could provide scope for easier policy, should that be appropriate to lend support to demand”. On balance though, we don’t think it will be required and forecast stable rates through to mid-2017. Nonetheless this requires the Chinese stimulus efforts to start generating a more positive outlook on demand.

This week it is the turn of the Reserve Bank of New Zealand (RBNZ) and the Bank of Canada (BoC). Neither are expected to cut interest rates this week – there are just 2 out of 17 economists expecting a move this week …read more

Source:: FX Street