豪 RBAは利上げなのか 利下げなのか

Markets are sending a worrying signal about the Australian economy

The Reserve Bank says the next move in interest rates is up. Yet investors are starting to embrace the idea that policy makers will be forced to cut.

That leaves the Australian dollar vulnerable, with predictions it could fall as low as 65 US cents.

In the bond market, the yield curve for overnight index swaps -- a gauge of expectations for short-term rates -- has inverted, showing that traders expect the RBA's cash rate to be slightly lower than the current 1.5 per cent in a year's time.

Similarly, the cash-rate futures market is now suggesting about 10 per cent chance of a cut in the second half of next year, and less than 5 per cent for a hike.

Investors are increasingly expecting the RBA to cut, rather than lift rates next year.

A slew of weaker indicators, including evidence of a housing downturn so harsh that Sydney house prices are dropping the most in three decades, has spurred concern at global fund managers BlackRock and T. Rowe Price.

The most recent consensus among economists was there's no move coming from RBA Governor Philip Lowe next year, and a hike in 2020.

If I had to set up a casino and the odds were 50/50 that the next move would be up or down, I'd put my money on the next move being down.

That leaves the Australian dollar vulnerable if predictions for a cut start to spread.

Money managers AMP Capital Investors and Quay Global Investors have gone so far as to forecast that the next move in the policy rate is down.

While the RBA hasn't ruled out a reduction if needed, the central bank anticipates a tightening in the job market that will boost inflation and at some point necessitate a rate rise.

If things really turn down here and you've got some serious declines in house prices, probably mid-60s would be the floor on the Aussie.

BlackRock's Craig Vardy
Australia's dollar has been the worst performer among the Group-of-10 major currencies so far in December. But trading near 72.3 US cents on Friday morning, it was some way off the 70.2 US cents low hit in October.

"If things really turn down here and you've got some serious declines in house prices, probably mid-60s would be the floor on the Aussie" against the dollar, said Craig Vardy, head of fixed income, Australia, at BlackRock in Sydney.

While Australia continues to grow faster than the US and consumer confidence is holding up, several data points have stoked investor worry alongside the housing weakness.

Gross domestic product showed the weakest quarterly performance in two years last quarter.