Bank of America Global Research discusses its expectations for next week's RBA September policy meeting.
"The RBA Board meets next week amid extended lockdowns impacting more than half of the population. While this should signal near-term forecast downgrades, the Bank has maintained an upbeat outlook on the economy into 2022 that might be more uneven," BofA notes.
"We expect the RBA to reaffirm dovish forward guidance, but retain tapering plans to commence this month. A dovish taper means mid-curve AUD rates may struggle to lead any meaningful rates selloff and the 3s-10s curve should continue to hold a steepening bias. AU US 10yr spreads are likely to remain narrow for some time. We expect higher AUD by year end but domestic reopening as well as broader policy easing in China are necessary preconditions," BofA adds.