Bank of America Merrill Lynch Global Research discusses its expectations for the RBA's July policy meeting.
"The Reserve Bank of Australia (RBA) looks likely to deliver back-to-back cuts. They have signaled that easier policy will be needed, so would presumably want to avert a surprise considering current market pricing and an unwelcome tightening of financial conditions. We also expect a further cut in November, but focus will have to shift to other policy support. This may mean a flatter curve and some underperformance of AU relative to NZ rates,"BofAML projects.
"We expect the RBA to play a much greater role in short-term funding markets if there is ongoing commitment by the federal government on delivering surpluses. A more balanced approach to policy easing will also allow AUD to participate in any USD sell off driven by Fed easing," BofAML adds.