The RBA showed very few changes compared to the June statement. This is dovish on an absolute basis, although the market was looking for even more dovishness. The RBA did add a reference to China and Greece, but downplays the impact of recent volatility in light of accommodative financial conditions across the globe. They do not change the language on commodities despite recent pressure. So not much to work with, and the Aussie is falling more on inertia than anything else.
Europe developments have also been boring...ECB kept ELA in place at current levels but upped haircuts, while fiscal authorities sounded optimistic on prospects for an agreement approaching today’s Eurogroup meeting. However, 6 EU countries now support a Grexit, and the market is pricing a 70% chance of a Grexit. So the bias on the Euro is still to the downside.
1. Who Said What
- ECB maintains ELA assistance as is, ups haircut on collateral 10% - Reuters.
- IMF tells Greece it cannot provide money due to missed payment – Reuters.
- ECB/Austria CB Nowotny says bridge program for Greece thinkable – ORF TV.
- RBA leaves OCR at 2.0% as eyed, lower AUD likely, inflation consistent with Target, policy needs to remain accommodative, China-Greece bond impact small.
- Fitch affirms New Zealand at AA with positive outlook.
2. Calendar
CET Time - Source: Investing.com
3. Asian Equity & FX Roundup
Slow session in Asia. Attention is being stolen by Chinese stocks after the weekend policy move. Shanghai A-shares Index opened down 3.2%, did recover initially but later came under pressure again with Shanghai B-shares plunging nearly 9%.
Nothing much to note in the FX world. Indices remain quite choppy, with a logical underperformance of EU indices.
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