Critical interest rate decision by RBA

After a relatively uninterrupted rise since mid-May, the Aussie seemed to face a critical ceiling at 93 a couple of weeks ago. After last week's de-risking on Wednesday, the bounce on Thursday and the broad based sell-off on Friday (many theories floating around, including Oct/Nov year-ends for many hedge funds and watermark related liquidity), the market would indicate some interesting moves, especially in the context of the parabolic rise in the VIX. 

However, the upcoming interest rate decision has the potential to drop the hammer. Especially with the hawkish tendencies by the RBA over the past few years and the price action in commodities, a bump over the consensus (3.5%) could blow the Aussie past the previously indicated technicals.

It will be interesting to see which side prevails.

Comments

[Anonymous]

Sydney Futures Exchange rates a 0.25% increase (at least) a certainty, and a 0.5% increase at 59% probability at the end of today:

http://www.asx.com.au/sfe/targetratetracker.htm

[bonddude]

Roubini's right again ??

[aus_punter]

"a bump over the consensus (3.5%) could blow the Aussie past the previously indicated technicals."

and in the process send many a mid cap mining company broke as their margins get destroyed, decimate the tourism industry, cripple  any nascent recovery and give the government more reasons to tax tax tax to pay for more uselss stimulus and more home buyer grants.   

[SteveNYC]

Good post Punter. You are right, the "first home bubble grants" are going to have major repurcussions when they are ceased down there. First home buyers who are paying far, far too much for garbage real estate are going to be bearing a large burden for decades in the form of well over the top mortgages.

Pray that the job situation holds up down there, or there will be a crisis of epic proportions.

[Cornelius]

No argument here, but rewind back to the last RBA decision; consistency, not common sense.

[Anonymous]

China will own your beloved mother-country soon.

rosettastone.com/learn-chinese

[There ya go again.]

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??????!!

[Anonymous]

sounds like the patsy in the game of competitive currency devaluation is Australia

[Anonymous]

If the AUD rate goes higher, would that not ENHANCE the benefit of the carry trade?

[Cornelius]

Yes - "blow past the technicals" indicates it would go up past the aforementioned resistance level circa 93.

[AR]

We sent these two article (links below) to Cheeky last Friday that are related to the "subtle" changes taking place by Central Banks around the world. Thus, leading (setting up) the markets toward expectations for a retraction of liquidity. We expect more of this into year-end.

Consistent World “Theme”  /  Coordinated effort between countries to SLOW so-called “stimulas/debt purchase programs”   *** General:      U.S.  /  As announced, the U.S. begins winding down some of their POMO programs today    1)                     BOE  /  Bank of England may pause its’ Bond Purchase Programs  (Bloomberg)   http://www.bloomberg.com/apps/news?pid=20601085&sid=auXtSgOEQ544     2)                     BOJ  / Bank of Japan Ends Debt Buying as Central Banks Phase Out Emergency Steps  (Bloomberg)   http://www.bloomberg.com/apps/news?pid=20601080&sid=abYPT_DzzauE