We’ll try our best to avoid references to Groundhog Day this morning but the fact remains that the Aussie Dollar is stuck within some very familiar ranges. It will be no surprise to read that throughout the Northern Hemisphere trading sessions it remained on a US 76 cent big figure. Indeed, just 46 pips separated its highs and lows of 0.7619 and 0.7665 respectively.
We highlighted here yesterday that RBA Deputy Governor Guy Debelle was scheduled to give a speech on business investment. Mr. Debelle is always a fascinating speaker and foreign exchange professionals worldwide will be familiar with his work as the lead on the FX Global Code. He describes this as, “global principles of good practice in the FX market to provide a common set of guidance to the market, including in areas where there is a degree of uncertainty about what sort of practices are acceptable, and what are not”. It is effectively the new global FX rulebook and is well worth reading over a couple of flat whites.
Yesterday’s speech, however, was more about business sector activity and what it may mean for monetary policy and his plain speaking is always a refreshing antidote to the usual global Central Bank dullness. As he put it, “Are we just going to jack up rates to see how the household sector lives with that? I don’t think so.”
As we await and then pore over all this week’s incoming economic data and scrutinize them for what they may mean about the Cash Rate, just be certain of one thing: the RBA is in no hurry at all to raise rates. And with this in mind, the AUD will need some hugely positive activity numbers if it is even to stabilize, let alone reverse its recent decline.