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Carney's `Brexit' Headache Intensifies With Rate Outlook Schism

Mark Carney could face a challenge in just over two months, regardless of whether Britons choose to stay in or quit the European Union. While the Bank of England governor has signaled a slow tightening path, and investors see no rate increase for years, a vote to stay in the EU on June 23 potentially creates a whole new backdrop. With ‘Brexit’ risk removed, markets could pull in bets for a hike, generating a new communication hurdle for the Monetary Policy Committee, which holds its monthly meeting this week.  Read more...

RBA Edwards said low inflation provides scope for rate cut

RBA board member John Edwards, who told Ticky Fullerton on ABC’s The Business that he thinks the dollar should be lower. Edwards echoed comments made earlier this week in RBA governor Glenn Stevens’ post-board meeting statement that an “appreciating exchange rate could complicate the adjustment under way in the economy”.“I think we’d be better off if the dollar was lower, and quite a bit lower,” Edwards said. Read more...

Aussie supported by attractive bond yields

There were no data releases from Australia this morning. On Tuesday, the Aussie surged to its highest level in nearly a week as investors scaled back expectations for how fast and far U.S. interest rates might rise this year after Fed Chair Janet Yellen emphasized the need to proceed “cautiously” on tightening policy. 
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Aussie higher despite no data releases

There were no data releases from Australia this morning with banks being closed in observance of Easter Monday holiday, with markets mostly speculating on future FED and RBA monetary moves. ABN Amro say they believe the Reserve Bank of Australia is likely to lower the Official Cash Rate, a move that is not priced in by financial markets, and therefore the Aussie. This is clearly a downside risk for the Australian dollar exchange rate complex as it suggests demand for AUD in the carry trade will be diminished. Read more...

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