fxstreet.com 08 Feb, 2021 08:45 am

RBA policy and tensions with China to cap the aussie at 0.76-0.77 – Rabobank

RBA policy and tensions with China to cap the aussie at 0.76-0.77 – Rabobank
The Reserve Bank of Australia (RBA) extended its QE programme this month, with one eye on the value of the AUD. AUD assets have been the target of car

The RBA would like to see increased wage inflation, in contrast, various market voices are sounding cautious about asset price inflation.” “The RBA has made it clear that it will not increase the cash rate until actual inflation is ‘sustainably within the 2 to 3 percent target range’ and it specifies that this will require wage inflation to push ‘materially higher’.” “Given that monetary policy is a blunt tool and given Australia’s failure to produce any meaningful wage inflation for years, it is also questionable if the RBA can really achieve a ‘material’ increase in wages without structural changes in the labour market.” “The policy measures taken by the RBA this month may have wrong-footed AUD bulls.

This outlook suggests scope for the RBA to pull back from its extraordinary policy measures ahead of the Fed, a move which could push AUD/USD higher.77 on AUD/USD in the coming months Key quotes “We maintain our view that RBA policy combined with concerns about trade tensions with China will keep a lid on AUD/USD.

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