Just read on the daily reckoning that the RBA will be making their November interest rate decision tomorrow. Will Glenn Stevens keep rates on hold to help cool the RE market and lower the AUD or will he cut to try and stimulate a slowing economy???
Bad CPI numbers recently and housing is "reported" as showing signs of cooling. Maybe there could be a cut!!!!
I've been saying a that there's going to be a cut as I don't think that RBA can sit on their hands. But there's larger issues at play and that's the big risk for the forbidden "R" word... shhh... recession. Question is... lower now and risk reducing ammo if a recession takes place or don't lower and risk bringing on a recession. Either way the economy is softening and commodities aren't picking up. AUD being low at least offsets the falling commodity prices. Tough one. Lots of talk on RE bubble popping... and that'd be a world of pain for banks too, defaults would soar and economy would fair badly. I truly think chance of a rate drop by end of year is on the tables, too much risk otherwise. RE is overinflated but a rate drop might not stop the softening completely, it would help. Banks need to sure up lending practices and APRA rule changes does give them pause for thought... Rocky waters ahead. JM2C
Betting markets price in a 25 point rate cut tomorrow at about a 40% chance. I think the likelihood is much higher. Where is the risk for the RBA (and politicians) if they do cut? The RBA gets to look good, the politicians do too. Any over-stimulus that feeds a bit of inflation - well that's a win in the context of the global "spectre of deflation". Currency drops a bit more - win for the currency wars and ease pressure on our struggling manufacturers. Saving the property market bubble from popping - that's a win. They get to point the finger then at the big 4, who probably pass on "some" of the cut, so they get to deflect some of the recent cr@p they got for raising rates and also ease up on the borrowers. They also get to pocket a few basis points to shore up their balance sheet which helps them in compliance of the Murray report findings. Who loses if they cut rates tomorrow? Everyone gets a nice warm fuzzy on a festive day of the great race that stops a nation and when nobody has to think to hard about it. It's a no-brainer.
Ye I reckon you are right....The odds are all in their (the RBA) favour. They will actually spruik this rate cut as an economy saver' even while propping up the RE bubble even further. They've actually still got quite a bit of ammunition left compared to say the U.S?
If.... the RBA drops rates, AUD down, silver up. Or.... rates stay the same, the Fed increases rates in 5 weeks, AUD down, silver up. Sub $22 won't stay much longer, now is a good time to buy.
I don't reckon they'll do this so much because the RBA and politicians don't really want to admit that the economy is in trouble in the first place. Don't agree with this part. Fed increases rates in 5 weeks and gold/silver drops in USD. Sure the corresponding drop in AUD maybe offsets the price drop of gold/silver in AUD but I reckon the best case scenario here is gold/silver stay neutral in AUD. Best overall scenario for gold/silver in AUD is RBA drops rates but the Fed does not. I think this outcome is unlikely because if Fed doesn't raise rates soon then gold will have a major upside breakout that will be disastrous for central bankers worldwide. They just can't afford the risk that gold could replace USD as the worlds de-facto reserve currency. DISCLOSURE - I have purchased USD ETFS on the ASX as I expect both an RBA cut AND a Fed increase in 2015, both of which would hurt the AUD/USD exchange rate.
I'm going with no rate cut although I intend on having pending orders on either side of the AUD/USD pair regardless of the decision. CPI is soft, but I think the RBA will want confirmation. There's really no benefit from cutting at this point other than trying to boost exports by cheapening the dollar as the banks are not going to pass on the cut. There's also only a few arrows left to fire so the RBA will want to use them more sparingly and I don't think we're there yet. 2Y Aussie bonds are 1.77% at the moment so the market reckons there's a fair chance.
Yep on hold. I suppose its a good thing, did'nt want to see the RE market get overstimulated with even cheaper credit than we already have. http://www.9news.com.au/national/2015/11/03/13/38/rba-hands-down-interest-rates-decision
RBA keeping the gun powder dry for now. AUD went from flat and has been inching higher and now is having a bit of a run up. Wait and see approach, I suppose they are looking for more number first. At 2% there's not a lot in the tank... risk of recession is on the cards though. Keep an eye on RE especially the glut of apartments that are being built.
So long as the Fed continues to talk up the chances of a rate hike between now and the next FOMC meeting, the AUD should still come under selling pressure, but the talk needs to be backed up by the data. Friday's US non-farm payroll numbers may give a clearer picture of where the AUD will head in the near-term as the market further prices in a Fed rate hike or prices it out. +180k the AUD should sell off, -150K the AUD should strengthen briefly before it starts pricing in a RBA cut in December, a number between 150-180k gives no real clear indication.
A low AUD is mostly bad for me, I wish it would go back to parity to make things nice and convenient. Sure my PM's in AUD would go down, but that just creates a better psychological buying opportunity
