Intraday Market Thoughts

Archived IMT (2010.05.03)

by Ashraf Laidi
May 3, 2010 22:27

RBA SET TO RAISE rates by 25-bps to 4.50% tonight (4:30 GMT), which could give a short-term boost to the Aussie, but once again, it is the tone of the statement that could help shape the Aussies direction. Last week's release of the 2.9% rise in Q1 CPI was the highest in 5 quarters. Nothing in the last RBA statement indicated a hint at a pause as the tone sounded robust regarding domestic and region-wide fundamentals. Despite mentioning the concerns regarding some sovereigns, we expect RBA to opt for another rate hike, but possibly with sounding off a more concerned tone regarding Eurozone sovereign debt. Any change in language regarding the sovereign problems would limit Aussie's upside to a rate hike. A rate hike could lift AUDUSD towards 0.93 trend line resistance, at which point the prevailing dynamics of risk appetite will take over (US financial stocks, Goldman Sachs, Greece and global market response to Wall Streets Monday rally). AUDJPY seen propelled towards 88.00 partly due to YEN WEAKNESS. An unlikely decision to NOT raise rates would drag AUDJPY towards 86.20 trend line.

 
 

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