RBA: Outlook for global economy described as “reasonable” - Westpac
The Reserve Bank of Australia (RBA) described the outlook for the global economy as "reasonable", the Westpac FX Strategists said in a quick response to the RBA interest rate decision due earlier today at 0330 GMT.
“Given the backdrop of the rapid spread of the novel coronavirus, the sharp drop in commodity prices and the potential hit to tourism/ services as a result of the bushfires in Australia, markets could have been forgiven for going into today's RBA meeting with a downbeat outlook.
That view was not obvious in RBA statement with the outlook for the global economy described as "reasonable"; no change in growth forecasts for Australia; no mention of the sharp drop in commodity prices and the impact of coronavirus seen as "temporary".
Not surprisingly, the A$ has popped higher as a result of the more upbeat statement to a high of 0.6725. The move could extend slightly further towards 0.6750, however, we doubt that we will see much further strength near term.
Indeed, much above 0.6775/ 0.68, our fair value methodology suggests the A$ would be expensive given the sharp drop in commodity prices seen so far this year.”