Curve Daily Commentary, May 5, 2015

RBA Decision Day

Just when it was looking a safe bet that the RBA would move today, the data yesterday was rather up beat, leaving the market sitting on the fence over today’s decision.

After showing signs that the peak was in over the past couple of months, building approvals posted a 2.8% rise in March leaving them 23.6% higher than a year ago. Australia’s recent love affair with apartments continued with their approval numbers now rivalling those of private detached housing for the first time.Consuner Confidence Slump

The ANZ job ads report also posted a solid rise, with the number up 2.3% after last months unexpected fall. The previous months decline was the first in almost 12 months.

As a result the market has pared back its expectations of a 25bp cut a little with the probability now sitting just above a 50/50 chance.

One of the big concerns remains consumer confidence, especially on the eve of the next Federal Budget. Adding to those concerns, the latest weekly update from ANZ-Roy Morgan which was released this morning showed another dip in confidence. The 2.8% fall, taking the index to its lowest level since last years post budget decline comes despite a rate cut widely expected at today’s meeting. The biggest concern is that the most recent fall was driven by concerns over family finances, which has remained buoyant up until now.

It still seems as if a cut is going to be the likely outcome at today’s meeting however it will be a close call.