Australian Dollar Talking Points
AUD/USD[1] snaps the series of higher highs & lows from earlier this week as data prints coming out of China[2], Australia’s largest trading partner, instill a weakened outlook for the Asia/Pacific region, and the exchange rate may face a more bearish fate going into the Reserve Bank of Australia’s (RBA) last meeting for 2018 as the central bank is widely expected to keep the official cash rate (OCR) at the record-low.
AUD/USD Snaps Bullish Series, RBA to Keep Cash Rate on Hold
It remains to be seen if a meaningful development will materialize at the Group of 20 (G20) Summit in Argentina as the U.S. and China struggle to strike a deal, and the ongoing threat of a trade war[3] is likely to keep the RBA on the sidelines as ‘the direction of international trade policy continued to be a significant risk to the global outlook.’
With the federal election coming up in 2019, the RBA may continue tame bets for higher borrowing-costs as ‘there was no strong case for a near-term adjustment in monetary policy,’ and more of the same from Governor Philip Lowe & Co. may produce near-term headwinds for the Australian dollar as the Federal Reserve is still expected to deliver a 25bp rate-hike in December.
Keep in mind, recent comments from the RBA suggest the central bank is bracing for a further depreciation in the aussie-dollar exchange rate as officials note that ‘changes in the expected paths of monetary policy over the preceding year had been reflected in changes to financial market pricing, most notably a broad-based appreciation of the US dollar,’ and it seems as though
