Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Interest Rates

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 

Australian dlr slips, bonds rally as RBA sounds dovish

10/14/2020 | 09:21pm EST

SYDNEY, Oct 15 (Reuters) - The Australian dollar slipped and bonds rallied on Thursday after the country's central bank stoked speculation of a near-term cut in interest rates while hinting it may buy more longer-dated government debt.

The Aussie eased 0.3% to $0.7138, taking it further away from last week's top of $0.7243 and nearer support around $0.7125 and $0.7094.

The New Zealand dollar was steadier at $0.6654, where it has been for much of this week.

The big move was in Aussie government bonds where 10-year futures jumped 8 ticks to 99.2400, their highest since early April and a clear break of major resistance at 99.1800.

The rally came after Reserve Bank of Australia (RBA) Governor Philip Lowe noted that 10-year yields were among the highest in the developed world and it was worth considering whether buying the debt in the market would bring those down.

While the central bank has been a regular purchaser of short-term debt, it has shunned the long end.

"It is also likely the RBA will announce their intention to purchase more bonds in the 5-10 year part of the curve," said CBA economist Kristina Clifton.

"Lower bond yields will have the first round effect of reducing interest costs for the government as they continue to provide a massive amount of fiscal support to the economy."

Lowe also said further policy easing would have more impact now that coronavirus restrictions were being eased across much of the country.

"We see the RBA lowering the cash rate target, term funding facility rate and three year bond yield target to 0.10% in November," said Clifton at CBA. Rates are currently at 0.25%.

The market has already largely priced in such a shift, with three-year yields at 0.14% and November bank bill futures at 99.920, implying a rate of just 0.08%.

The need for further stimulus was underlined by data showing 29,500 jobs were lost in October while the unemployment rate rose a tick to 6.9%.

Lowe earlier emphasised that creating jobs was the number one priority of both monetary and fiscal policy, and the central bank stood ready to do all it could to help.

Also weighing on the Aussie were more reports that Chinese importers were deferring purchases of Australian coal amid trade tensions between the two countries. (Reporting by Wayne Cole; Editing by Sam Holmes)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.01% 0.95435 Delayed Quote.5.02%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.44% 77.262 Delayed Quote.0.67%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.02% 1.04416 Delayed Quote.0.02%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.18% 0.66469 Delayed Quote.-1.43%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.11% 0.73811 Delayed Quote.4.86%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.47% 1.80897 Delayed Quote.-4.13%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) -0.19% 1.63354 Delayed Quote.1.49%
Latest news "Interest Rates"
01:38aBOJ AMAMIYA : new bank aid wouldn't affect market interest rates
RE
12/01Australia, NZ dlrs supported, bonds beaten by strong economic data
RE
12/01Taiwan c.bank governor says whether or not will raise interest rates next year depends on the situation
RE
12/01Bond investors count on Canada to chart fiscal path back to normal
RE
12/01Reuters summit-nissay asset's ozeki says global stock markets likely to rally further in 2021 on policy support, low rates
RE
11/30Australia c.bank holds rates as housing market booms
RE
11/30Australia home prices heat up as super-low rates stoke demand
RE
11/30Canada says it will issue its first ever green bond in 2021/22 to fund green infrastructure and other initiatives
RE
11/30Canada sees share of long-term bond issuance rising to 29% in 2020-21 from 15% in 2019-20
RE
11/30U.S. bond volatility players eye 2021 inflation bump
RE
Latest news "Interest Rates"