RUSSIA
The perspective for the Russian currency remains neutral for the time being,
according to BofA Merrill Lynch Global Research.
Key
Quotes
“We remain neutral on RUB, as our
commodity team sees stable oil prices through yearend and with the
CBR committed to buying USD if RUB falls below 60. Oil price
volatility remains a risk”.
“The economy has finally started to show
positive signs of stabilization in 3Q, which might support our call that the
economy already troughed in 2Q”.
“According to Economic Ministry
estimates, real GDP stabilized in month-over month seasonally adjusted terms in
July-August and started to grow in September”.
“Industrial production and
investment fell by much less than expected in September, with the decline easing
to its weakest levels since 1Q”.
“Also, the labor market remained very
tight with the unemployment rate falling even further to approach historical
lows, even despite the negative seasonality”.
AUSTRAILA
The Reserve Bank of Australia left the policy rate unchanged, but also left an easing bias in place. According to James Knightley, analyst at ING, they continue to have a forecast of a 4Q15 rate cut, although this is perhaps looking less likely.
Key Quotes
“We had been thinking
that the RBA may have opted to loosen policy further earlier today, but in the
end they kept the policy rate unchanged at 2%, suggesting that “the prospects
for an improvement in economic conditions had firmed a little”. The statement
also highlighted the “somewhat stronger growth in employment and a steady rate
of unemployment”. Nonetheless, the RBA reiterated the view that “the economy is
likely to have a degree of spare capacity for some time yet”. While inflation is
likely to be broadly in line with target over coming years, the forecast is “a
little lower than earlier expected”. Consequently, “the outlook for inflation
may afford scope for further easing of policy”.
“As such, we see an
ongoing implied easing bias and as with all other central banks, the decision
will come down to the data flow. We continue to have a forecast of a 4Q15 rate
cut, although this is perhaps looking less likely – the market is pricing in
around a 30% chance of this with a 25bp move fully priced for May”.
“The
RBA may well be hoping that a Federal Reserve rate hike does most of the work
for it (by raising US rates, allowing further weakening AUD versus USD) given
relative strength in the domestic housing market and concerns as to what
additional stimulus would mean for it”.
