RBA could hike rates in 2018 – TDS

Strategists at TD Securities now see the RBA hiking rates next year, while AUD/USD keeps gravitating in a 0.75/0.77 range.

Key Quotes

“The RBA continues to voice a glass half full tone, especially the global backdrop (despite Trump-led policy uncertainty). The RBA has become more vocal about financial stability risks (the key driver of our Q4 rate hike call) and so the deployment of macro tools delays our hike into 2018. The composition of the labour market remains a concern, although the recent improvement in male full-time hours worked is encouraging”.

“The AUD is trading $US0.75-77 as rates differentials support the downside while still-buoyant commodities provide support (chart). Reading between the lines hints that the RBA is comfortable with the currency at these levels and no need to jawbone aside from "an appreciating currency" complicates the economic outlook”.