News & Opinions Home
Market Place
Reuters Australia
Aussie dips, RBA sounds less hawkish than some hoped
Tuesday November 3, 06:52 PM
* Aussie slips as RBA leaves December hike in doubt
* RBA raises rates by an expected 25 bps to 3.50 percent
* Bond futures surge; swap rates slip
SYDNEY, Nov 3 (Reuters) - The Australian dollar slipped on Tuesday after the Reserve Bank of Australia raised interest rates by an expected 25 basis points but sounded less hawkish than some had bet on. Markets are now wavering on bets for rates to rise to 3.75 percent next month after the RBA said it was prudent to "gradually" loosen policy. "Some investors were disappointed because the RBA wasn't as aggressive as expected," said Peter Jolly, an analyst at National Australia Bank. Rates stood at 3.50 percent after Tuesday's rise.
The Aussie AUD=D4 slipped to $0.9007, off an intra-day high of $0.9092 as investors sold on the fact. It is now hovering near the floor of an eight-month long upward trend channel.
The daily MACD chart for the Aussie signals the currency may come under more selling pressure, but the weekly chart suggested any softness was temporary.
December interbank futures 0#YIB: jumped 0.10 points to 96.36, showing an implied rate of 3.64 percent. The implied rate stood at 6.76 percent before the RBA rate decision was announced.
One-year overnight index swaps AUDOIS slumped to 4.37 percent, from 4.54 percent before the RBA decision. That was the largest one-day fall in absolute terms since September.
Bond futures rallied. The three-year contract YTTc1 jumped 0.14 points to 95.01, and 10-year bond futures YTCc1 added 0.08 points to 94.53.
A comparison of the RBA's statement on Tuesday showed it was little different from that published in October.
In both statements, the RBA noted the rise of the Aussie, and said it was "prudent" to "gradually" ease policy.
Among the most striking differences were comments on Tuesday that unemployment should peak at a "considerably" lower rate, and that inflation would stay within target in 2010.
Most analysts agreed the RBA's cautious tone signalled it is not inclined to lift rates by 50 basis points in December. Some noted it has never in the last 20 years raised rates over three consecutive months.
But analysts' predictions came with a caveat -- the strength of this month's economic data reports would shape the RBA's call.
"Officials are inclined to take each meeting on its merits," said Stephen Walters, an analyst at JPMorgan.
"This leaves open the door for the RBA to pause if there is a weak patch of domestic or offshore data."
Next Article: Australia shares seen up but Dow retreat may limit
Previous article: Oil rises towards $78, China data supports
Top Headlines
Early gains for NZ sharemarket
Thursday November 5, 10:44 AM - NZPA
The New Zealand sharemarket rose in early trading, after the United States Federal Reserve said it would keep interest rates .. Read More
US interest rates stay at near zero
Thursday November 5, 09:31 AM - Newstalk ZB
America's Federal Reserve is keeping interest rates at near zero and plans not to raise them for some time. .. Read More
NZ dollar rises after Fed decision, bonds softer
Thursday November 5, 09:20 AM - Reuters New Zealand
* Kiwi around $0.7289/94, compared with $0.7191/97 in late local trade on Wednesday. Trading was choppy initially af .. Read More
Calculators
Copyright © 2009 Yahoo! All rights reserved.
Yahoo!Xtra: A Yahoo!7/Telecom New Zealand Company.