From Morgan Stanley today comes some sense at last, via ForexLive.
On the NAB survey:
- decline was led by a noticeable reduction in profitability
- and trading conditions
- the lowest level for both since mid-2014
- The weak business sentiment compounds the decline in confidence we have already observed on the household side
On the RBA:
- RBA board member, Ian Harper … his personal view that the next rate change will still likely be up rather than down
- However, financial markets disagree and cash rate futures continued to rally and are currently pricing in 70% probability of an RBA cut in the next 12 months. Funding in the Australian market remains tight, and with 3m AUD LIBOR rising close to two full hikes above the cash rate, we think Australia’s overleveraged households will unlikely receive any help from the RBA anytime soon as the cost of high bank funding flows on to Australian households.
We remain bearish on AUD and expect further erosion of household confidence as the housing market continues its decline.
Hooray for the bleedin’ obvious!