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3 Jul 2014
Why the AUD fell like a knife after RBA Stevens?
FXStreet (Bali) - RBA Governor Stevens has caused a big sell-off in the Aussie, with sellers stepping in while buyers rushed to the exits given the turn of events, wit Stevens back to a dovish mode.
There were quite a few dovish comments of signifcance on Stevens speech, saying that conditions in housing market do not warrant higher rates, which basically dashes off, only if temporarily, hopes for early 2015 rate hikes. On growth, Stevens said Q1 GDP probably overstated pace of growth, outlook little below trend, which again, it means a less optimistic view.
On the currency, we definetely had some juicy comments, with Stevens saying that investors are under-estimating the risk of sharp fall in A$ at some point, adding that he is not seeking to actively "jawbone" the currency lower (hard to think so after today's comments...). Also saying the AUD is overvalued by most measures, and by more than a few cents.
On rates, Stevens said not to have contemplated tightening, even noting that he could drop reference to stable rates long before giving any thought to tightening. If that was not dovish enough, Stevens threw another bombshell by saying monetary policy very accommodative, but still has ammunition on rates.
There were quite a few dovish comments of signifcance on Stevens speech, saying that conditions in housing market do not warrant higher rates, which basically dashes off, only if temporarily, hopes for early 2015 rate hikes. On growth, Stevens said Q1 GDP probably overstated pace of growth, outlook little below trend, which again, it means a less optimistic view.
On the currency, we definetely had some juicy comments, with Stevens saying that investors are under-estimating the risk of sharp fall in A$ at some point, adding that he is not seeking to actively "jawbone" the currency lower (hard to think so after today's comments...). Also saying the AUD is overvalued by most measures, and by more than a few cents.
On rates, Stevens said not to have contemplated tightening, even noting that he could drop reference to stable rates long before giving any thought to tightening. If that was not dovish enough, Stevens threw another bombshell by saying monetary policy very accommodative, but still has ammunition on rates.