Quick fundamental question, sorry still a newbie.

[AspiringTrader.]

Hi, just have a quick question for you guys.

The RBA's last meeting saw that the interest rates were left unchanged even though most economists expected a 25 point rise. Seeing this and due to government pressure and fear of public backlash the major private banks(commonwealth, westpac ect.) also decided not to pass on their own 25 point rate hike even though they claim to be losing money. which in turn pissed off a few large investors.

Now seeing today's Aussie CPI result and it being lower than expected(In which the AUS/USD dropped 160 odd points), i'm thinking could influence the RBA to leave rates unchanged again.. But i hear the other major banks are expected to raise their rates 25 points regardless because they are apparently losing money.

So my question is,

If the RBA decides to leave rates unchanged but the other major banks pass on there own 25 point rise does this impact on the Aussie dollar, would investors buy the Aussie based on this? or is it only good news for share holders of these banks?

All answers are greatly appreciated.
Thanks for your time,

AspiringTrader.

 

[scose-no-doubt]

If the RBA decides to leave rates unchanged but the other major banks pass on there own 25 point rise does this impact on the Aussie dollar, would investors buy the Aussie based on this? or is it only good news for share holders of these banks?

I'm no expert but I seriously doubt any sophisticated investor would buy Aussie simply for those reasons. You have fixed income traders around the world trading all sorts or methods stemming from interest rate differentials and spreads, liquidity stuff, expiry stuff, swaps, just all sorts. In short I doubt it's a black/white scenario over the short term anyway. Plus you have to be able to reverse engineer the bond prices to see what rates the markets are actually pricing in along the curve to see whether a result will actually be a shock

On the flipside maybe I over-think these things and the resultant of tout la monde et all of the above is Aussie up :/

 

[Martinghoul]

What matters to the AUD is what RBA does, not so much what the commercial banks do.

 

[scose-no-doubt]

I completely mis-read his question. here's what I basically saw:

Now seeing today's Aussie CPI result and it being lower than expected(In which the AUS/USD dropped 160 odd points), i'm thinking could influence the RBA to leave rates unchanged again.. But i hear the other major banks are expecting rates to rise

So my question is,

If the RBA decides to leave rates unchanged at 25 points does this impact on the Aussie dollar, would investors buy the Aussie based on this? or is it only good news for share holders of banks?

All answers are greatly appreciated.
Thanks for your time,

AspiringTrader.

So much for speed reading.

 

[AspiringTrader.]

Thanks for the replys,

Yeah i just wasn't too sure if it would have an effect or not.

Cheers,

AT.