Oz and the RBA endgame

Markets interpreted today’s Reserve Bank of Australia meeting minutes as dovish and the spot price of AUDUSD dropped from circa 0.7170 to 0.7140/50 levels. We now have three key dates on the radar, that could have much bigger influence on the pathway of Australian assets; from the AUD, to Aussie equities to Aussie rates and bonds.

• This Thursday, April 18, will see the always-volatile Jobs data where an employment gain of 15,000 is expected. This follows the number last month that was an abysmal miss. 
• For those who don’t follow the Australian economy, the jobs market is the last leg holding up a country that has not seen a recession in over 27 years.
• This is also on top of a structurally slowing China (from quantity focused growth to quality focused growth), metal commodities off multi-year highs and the structural cracks in the Australia housing and consumer debt markets.

•On  May 7 we have the next RBA meeting where the policymakers are more than likely set to deliver their first rate cut in over 2.5 years of sitting at neutral, with a key rate of 1.50%, vs. say 2.50% from the Fed or 1.75% from the Reserve Bank of New Zealand.
• Currently, the market seems to be implying a probability of a cut of c. 15.5% for the May 7 meeting, a number that could move either way given the upcoming jobs data on April 18.

• Finally, on May 10, should see the next quarterly update from the RBA on monetary policy, which will more than likely see downgrades on growth and inflation expectations.