AUD: Looking for a 2Q18 RBA rate hike - ING

In view of Viraj Patel, Research Analyst at ING, another disappointing jobs report puts the pressure on the RBA when they meet this week (Tue).

Key Quotes

“Certainly, the economic data of late has been fairly lacklustre, which lends itself to a slightly more cautious RBA tone. The fallout in the AUD from a dovish RBA is likely to be limited given that the curve has already pushed back expectations for a rate hike to Nov-18. Our economists see this as slightly pessimistic - especially under an environment of synchronised global growth; we have a 2Q18 rate hike tentatively pencilled in. On the surface, a hawkish RBA re-pricing would be AUD positive - timing when this happens is important.”

“Australian political risks are a factor, but we note that the currency is more taking its cue from the relative underperformance of base metals (iron ore) in the commodity complex. It's difficult to make the leap from Australian politics to any fundamental impact on the domestic economy. Nor does it pose any immediate implications for RBA policy.”