RBA To Cut Or See AUD/USD At 0.80 – Morgan Stanley

Tomorrow the RBA will decide on interest rates. The July inflation indication provided by the Melbourne Institute has come down to 1%Y from 1.5%Y in June. Australia’s import prices are falling rapidly, with China's RMB-TWI depreciation playing in.

Should the RBA – against our economist’s expectation – not cut rates tomorrow, AUDUSD will move to 0.80/0.81, in our view, with the weaker USD being the main catalyst.

Caixin’s July manufacturing indicator jumping by 2 points to 50.6 against the basically unchanged national PMI is an important data point supporting risk and commodity prices.

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