As expected, RBA Board left the cash rate unchanged at 2%. The statement confirmed the decline in the commodity prices and continuation of the growth of the non-mining sector and improvement in the labour market data around wages growth. The RBA was cautious about the GDP data which was released a day after the Board met. The GDP data surprised the market and printed a stronger than expected 0.6% for the December quarter and by 3% on a year to December 2015 basis seasonally adjusted. Although the market is still expecting the RBA to cut rates due to decline of Chinese growth and weak global economic signals, we do not believe a rate cut is imminent.
brexit unlikely
Brexit referendum takes place in Great Britain on 23 June 2016. The decision we believe will come down to which side demonstrates a better case for Britain as far as the economy is concerned. The poll surveys seem to indicate that the people are sceptical about the EU but not many people in fact want to exit. It is widely believed that an exit will cause the Pound Sterling to fall. The view is that there will be considerable uncertainty for business and that Britain will find it difficult to finance its current account deficit which stands at 4.7%. The rating agencies will also review the credit rating which may send pressures on cost of funds. The "For" Brexit group is looking at the migration issues that Europe is facing and the issue has certainly polarised the country and has made the poll closer than what was originally expected.
market data
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) | As at 4 March 2.00 2.32 2.55 1.87 0.7365 0.6728 83.74 4.7996 5090 1999 17006 2874 38.72 1258.95 | As at 26 February 2.00 2.29 2.38 1.76 0.724 0.6546 81.69 4.7325 4879 1948 16639 2767 35.1 1223.46 |
RSS Feed