Shorter-term, with 8bp of hikes priced for the July RBA meeting (a 32% chance of a hike), is this again priced too low? We see the peak RBA cash rate expectations of 4.34% by September; should this be priced closer to 4.6%, maybe even 5%?
To answer this, we will watch a combination of broad financial conditions, global economic trends, domestic auction clearance rates and anecdotes on credit demand. However, of the known data points, we look for:
- 13 June Westpac consumer confidence / NAB business confidence.
- 15 June - May employment report
- 28 June – May CPI report
- 29 June – Retail sales
- 3 July CoreLogic House price index
- 4 July – RBA meeting
- 26 July – Q2 CPI
- 15 August – Wage Price Index
For now, especially on the higher timeframes, the wind is to the AUD's back, and we see key technical breakouts vs GBP, EUR, and JPY, with AUDNZD having been on a one-way rampage. AUDCHF is eyeing a break of its range higher, having rallied from 0.5867, where a daily close could set the pair on for the double-bottom target of 0.6230.
The time for shorting the AUD (on the higher timeframes) will come soon enough, but until China turns lower and rates look fully priced, the skew in risk that for more upside in the AUD.