Halister News

(Bloomberg) -- The RBA may increase dovishness in the wake of soft capex last week and signs that Canberra is averse to fiscal stimulus, writes Bloomberg strategist Michael G. Wilson.

• RBA will leave benchmark rate unchanged tomorrow, according to all 27 economists surveyed by Bloomberg; announcement due at 2:30pm Sydney time
• With 2016-17 private capex intentions at lowest in 9 yrs, the RBA may may choose to talk the currency lower via a dovish statement
• Treasurer Morrison damped any expectations for extra spending in a Feb. 17 speech, citing lower tax revenue as commodity prices fall, AFR reported
• G-20 fiscal pledges over the weekend lacked specifics and have curtailed risk appetite as the week begins; that puts burden back onto the RBA for economic stimulus; at its Feb. 5 meeting, RBA saw “fiscal consolidation over coming years, albeit at a slower pace than previously expected”
• RBA may be resigned to positioning for an eventual cut; it last month said “the global economy is continuing to grow, though at a slightly lower pace than earlier expected” and flagged China risks Feb. 5
• Given FX positioning on Aussie, market may be vulnerable to any jawboning from RBA; leveraged funds have smallest Aussie short position in about 2 months