Halister News

(Bloomberg) -- RBA’s preference for demand-based inflation over imported inflation suggests a weak jobs report tomorrow may nudge the central bank toward an easing at its May 3 meeting, writes Bloomberg strategist Michael G Wilson.

• In its April monetary policy statement, Governor Stevens singles out labor market strength as one of two components to determine policy, the other being “continued low inflation”
  • RBA Assistant Governor Kent said earlier this week it’s still too early to gauge labor market’s strength
• Recent USD weakness and commodity strength has helped lift AUD toward year-to-date highs, diluting exporter benefits and adding to RBA’s dilemma
• Aussie OIS curve shows 1-year at 1.83% vs official cash rate at 2.00%
• Long Aussie positioning by leveraged funds is largest since Sept. 2014 and a data miss may trigger volatile reaction
• NOTE: Australia March jobs due data due tomorrow at 11:30am Sydney; est. 17k jobs vs 0.3k in Feb; unemployment rate est. 5.9% vs prev. 5.8%
• NOTE: April CPI data due on April 27
• NOTE: Michael G. Wilson is an FX strategist who writes for First Word. The observations he makes are his own.