Futures pointed to a lower open for Asian markets on Tuesday, following a choppy USA trading session, as traders look to likely easing from the Reserve Bank of Australia. The one potential road block to easier money in Australia comes in the form of the continuing upward trajectory of property prices Down Under – the RBA has been consistent in its warnings about the potential emergence of a house price bubble during recent months, making a loosening of policy far from nailed-on.
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The New Zealand dollar rose to a three-week high against the Australian dollar amid expectations the Reserve Bank of Australia will cut its cash rate to a record low 1.5% today, boosting the relative appeal of the kiwi.
Inflation data last week showed that the average of core consumer price index measures remained at a record low of 1.5% in the year to June.
Ellis predicted Commonwealth Bank and Westpac could withhold the largest portion of any RBA rate cut, as the two banks have the highest home loan market share, the SMH reported.
Financial markets are placing a 60 per cent chance the rate will be cut to 1.5 from 1.75 per cent at the central bank’s monthly board meeting on Tuesday.
The weekly ANZ-Roy Morgan consumer confidence survey, a guide to future spending, is released on Tuesday.
“Rates will more than likely fall lower this year”.
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Kohei Iwahara, an analyst with Natixis Japan Securities, said in a note the country’s slow economic transition away from resources, plus a strong Australian dollar, had pushed second-quarter inflation to its lowest level since 1998.
