From J.P. Morgan, here’s how closely RBA rate changes have followed HSBC China Flash PMI data since 2004.
China a huge consumer of Australia’s main exports – coal and iron ore – and accounted for 29.5% of Australian exports last year.
Research from Sally Auld, Managing Director, AUS/NZ Fixed Income Strategy at J.P. Morgan, shows how manufacturing activity in China has been a reliable forward indicator of RBA cash rate changes:
China Flash PMI came in below expectations at 47.7 yesterday.
J.P. Morgan expects the RBA to cut Australia’s cash rate by 25 basis points in November and again in February, taking the cash rate to 2.25% by 1Q2014.
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