What central banks are doing to safeguard financial stability and why they must proceed with caution 
Inflation: raising interest rates was never the right medicine 
Inflation: why prices look likely to stay high in the UK and Ireland, and what that means for mortgages 
Bank of England interest rate rise: why this could be the last increase for a while 
The Federal Reserve held off hiking interest rates 
Why central banks are too powerful and have created our inflation crisis 
Will the RBA raise rates again? Unless prices surge over summer, it's looking less likely 
If the RBA’s right, interest rates may not fall for another year. Here’s why. 
As treasurer, Bill Hayden set Labor on the path to economic rationalism 
Sure, the RBA froze interest rates on Tuesday, but there's plenty of pain to come 
The Federal Reserve and the art of navigating a soft landing ... when economic data sends mixed signals 
Governments have been able to overrule the Reserve Bank for 80 years. Why stop now? 
Driving Forces:
RBA has more reasons for further monetary policy easing. The RBA assumes inflation expectations will return to their long-term average, whereas we see a risk that they stay low for longer, helping cement low actual inflation. There has been a widespread decline in inflation expectations.
The further unwinding of the political risk premium and short positioning for the MXN. More focus on AUD fundamentals.
Stabilization of oil price to crawl higher over the next quarters as base metals to underperform the energy sector.
FX markets have tunnel vision. Fed Chair Yellen’s speech at Jackson Hole will be the key catalyst for a move, but even then it is not clear that broad ranges are set to break for the AUD. Downside risks remain, but a move below USD0.74 remains a big ask.
Trade Mechanism: Entry - 14.0270, 1y target: 12.50, stop: 14.70, Carry: approx.+2.9% p.a.
Risk Profiling: How much would USD/MXN rise if Donald Trump were to win the US presidency? And how much would AUD/USD fall? Certainly, the Trump risk is more fully priced into the MXN than the AUD, and this would limit the extent of the loss from his winning. Current pricing seems to overstate the risk (which we estimate at 25%).
