Bank Research Consensus Weekly 07.16.12
AUD Increasingly a Buy on Chinese Turnaround
Christin Tuxen, Senior Analyst, Danske Bank
The AUD is increasingly favoured by speculators and, after having been shed significantly earlier in the year, net positioning in AUD is now long. The RBA has cut rates on several occasions since the autumn and the cyclical downturn has hit the currency markedly. However, with Australian data surprising on the upside lately – not least vis-àvis the US – rate-cut expectations have moderated since early June. Together with the better-than-feared Chinese data, which suggests to us that China will avoid a hard landing, AUD looks increasingly attractive in our view.
Is More QE on the Way?
John E. Silvia, Chief Economist, Wells Fargo
This week the Fed released the minutes of the policy meeting that was held on June 19 and 20, at which the FOMC decided to continue its Maturity Extension Program (a.k.a. Operation Twist) through the end of the year. Although these decisions were announced on June 20, the minutes provide some more color behind the Fed’s thinking.
Canada – It Could Be Worse
Diana Petramala, Economist, TD Bank Financial Group
The most important economic event next week will be the Bank of Canada’s interest rate announcement and the release of July’s Monetary Policy Report (MPR). Our view is that the Bank of Canada will keep its overnight rate unchanged at 1.0% and maintain its forward looking language that some withdrawal of monetary stimulus may be warranted. However, the Bank of Canada is also likely to acknowledge a weakening global economy relative to its last MPR. Back in April, the Bank of Canada was anticipating Canadian real GDP growth of 2.4% in both 2012 and 2013. This is higher than our current view that given international headwinds, the Canadian economy will likely turn out real GDP growth of 2.0% over 2012 and 2013. However, given recent developments, it is likely that the Bank of Canada forecasts will converge more closely with our expectations in Wednesday’s MPR.
Compiled by David Song, Currency Analyst
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