Global markets sold off overnight as the US market opened after a 3-day weekend and reacted to fresh tensions involving North Korea.
Closer to home, the Reserve Bank of Australia (RBA) kept its key cash rate at 1.5 per cent for the thirteenth straight month as was widely expected, explaining a no-change stance is best to foster "sustainable growth in the economy" and to achieve its inflation target over time. As we have discussed previously we believe that both the RBA and RBNZ will keep interest rates unchanged for the foreseeable future.
This is key to our forecast for a higher US dollar and lower AUD & NZD (all else equal a higher interest rate drives demand for a currency and results in currency strength). We believe the market is underestimating the pace of rate hikes by the US Federa...
