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RBA Rates & Races

Published November 5, 2019

Author – Hayden Carswell

 

A strong run in equities continue after reports “phase 1” of the US/China trade deal maybe signed this month. This is also assisted from the Feds recent rate cut and the view that downside risk has eased, supporting market sentiment. The Fed has also been increasing security holdings to “maintain an appropriate level of reserves” and assisting liquidity demands.

With all the positive equity news the AUD didn’t follow and is back under 0.6900 this morning after retail sales rose a weaker than expected 0.2% month on month in September. The volume of sales fell 0.1% pa in Q3, the weakest since the early 1990 recession. Figures like this will cap the highs in the AUD as another RBA rate cut is still expected over the next few months.

Melbourne Cup day so keep an eye out on the on both the RBA and the horses. The RBA announces interest rates and mentioned this morning consistency is needed at a time of global uncertainty. Target inflation is between 2-3% over the medium term. Current core inflation has been under 2% for four years. Stability of the currency, full employment and economic prosperity are also included.