RBA rate decision next week: Board-member statements suggest a rate cut still very much on cards.

For many people, the big event on Tuesday will be the Melbourne Cup, the race that stops a nation, but 30 minutes before the off the RBA will deliver its latest rate decision. The market had been pricing in an 85% chance of a rate cut but this was lowered to around 65% after the CPI number mid-week. I’m definitely talking my position here, but I think the market is totally ignoring the comments this week from board members Broadbent and Ridout, both of whom spoke out against the high level of the AUD. The RBA has also stated clearly that it will use monetary policy to fight the high AUD, not direct intervention. If we read more RBA comments in this weekend’s newspapers then I will be smelling plenty of rats, and presuming that a minimum 25bps (and why not 50bps) will happen to put some more AUD speculative bulls to the sword.

Pretty uninspiring start to European trade, looks like traders are going to wait for the US GDP data before doing anything dramatic.