Benign RBA minutes: Focus on global equities - BNPP

Research Team at BNP Paribas, suggests that the RBA August meeting minutes this morning implied broad consensus among board members on lowering rates in August, but gave little away on whether the RBA would ease again later this year.

Key Quotes

“The central bank cut its cash rate by 25bp at the meeting but did little to signal further rate cuts ahead, which saw front-end rates tick higher in the immediate aftermath of the cut. With only about 16bp of further easing now priced in by year-end and the market long AUD according to our analytics, AUD would be vulnerable to any indication.

Even without expectations for immediate further rate cuts, we think the AUD is vulnerable to a rebuilding of Fed expectations especuially if global equities weaken as the market prices in a September Fed hike. We remain positioned for AUDUSD downside via a derivatives recommendation.”