Weekly Fundamental Australian Dollar Forecast: RBA On Defense; Data Trends Weakening; PMIs Ahead

RESERVE BANK OF AUSTRALIA INTEREST RATE EXPECTATIONS (MARCH 19, 2021) (TABLE 1)

Weekly Fundamental Australian Dollar Forecast: RBA on Defense; Data Trends Weakening; PMIs Ahead

Accordingly, rates markets remain tame enough – for now – to suggest that the RBA will be keeping rates unchanged for at least this year. Even after a round of comments from RBA  Assistant Governor Christopher Kent this past week that more or less eliminated any lingering hope for a cut to negative rates, Australian overnight index swaps continue to price in a 34% chance of a 25-bps rate cut. Amid a quiet slate for RBA policymakers ahead, rates markets will be free of any pushback for the final week of March.

For full Australian economic data forecasts, view the DailyFX economic calendar.

AUSTRALIAN DOLLAR NET-LONGS STICKING AROUND (CHART 2)

Weekly Fundamental Australian Dollar Forecast: RBA on Defense; Data Trends Weakening; PMIs Ahead

Finally, looking at positioning, according to the CFTC’s COT for the week ended March 16, speculators slightly decreased their net-long Australian Dollar positions to 7,620 contracts, down from 8,075 contracts held in the week prior. Australian Dollar positioning has been net-long for three consecutive weeks, and oscillating between relatively tame net-short and net-long positions since July 2020.

 

 

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