April 4, 2016
Australian Markets Weekly: 4 April 2016
The key Australian event of the week will be the RBA Board Meeting tomorrow along with a speech by RBA Assistant Governor Kent on Wednesday.
US non-farm payrolls still healthy, though Yellen dovish.
- RBA will need to say something about the $A, or the risk is the $A will rise further. The rise so far is not sufficient to produce a significantly over-valued $A or provoke a monetary policy response
- Rates expected unchanged – we will watch closely for any comment on inflationary expectations, though this is more likely in May SOMP after Q1 CPI result incorporated.
- Yellen Speech seen as dovish. Economic concerns were not new to the market – China economy and oil – but with the Fed seeing asymmetric risks, these increased risks reinforce Fed’s view that it should tighten only gradually. Recent data has been better (payrolls and ISM). NAB continues to look for two further rate hikes this year, which should see $A lower in second half of the year.
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