Goldman Sachs (GS) came out with its analytics ahead of the key Reserve Bank of Australia (RBA) monetary policy meeting, citing the Aussie central bank’s earlier decision to not defend the yield target.
The US bank expects the RBA to officially drop its Yield Curve Control (YCC) policy on November 02. The same hints at, “The risks around the meeting appear skewed in a hawkish direction as the Bank has limited options to forcefully push back against market pricing," per the GS.
Goldman also cites the Aussie core inflation below the 2.5% target and wage growth more subdued than the RBA's 3-4% criteria for liftoff to expect that, “RBA to remain a laggard in the medium-run in terms of liftoff relative to other G10 central banks.”
The same joins the bank’s bullish view on oil and bearish expectations for iron to mention that the AUD/CAD downside could become an attractive opportunity once the tactical risk event has passed.
Also read: AUD/USD retreats towards 0.7500 ahead of RBA