AUD/USD is set to surge unless the RBA changes its policy stance
The key issue is whether Governor Michele Bullock heeds market assessments that last week’s unexpectedly weak third-quarter GDP is a game-changer for the economic and inflation outlook
The data showed Australia’s economy grew at its slowest pace since 1991 — excluding the exogenous shock of the Covid pandemic.
And it confirmed that GDP growth is slowing much more than the 2012-13 slump — which came just after the RBA last started an easing cycle.
The RBA is widely expected to leave policy unchanged on Tuesday. However, the GDP figures prompted OIS traders to view February as a coin toss for a rate cut, rather than a near-certainty.
And the April 1 meeting is now seen as a 90% chance in exchange rates based on the meeting date, even though the move was fully priced in late last week.
Source: Bloomberg
