Citi discusses its expectations for this week's RBA September policy meeting.
"Our base scenario is for the Bank to decide delaying the tapering implementation, but it indicates flexible adjustment of the asset purchase amount in the case. The sub scenario is the implantation of the announced tapering to AUD4bn weekly, but the RBA will also confirm its will to adjust asset purchases flexibly in this case too," Citi notes.
"Therefore, despite a likely different initial reaction, the market impact supposed in these two cases will become similar eventually. If the Bank decides to continue asset purchases simply at the current rate of AUD5bn weekly (without no indication of the flexible adjustment), it will be a dovish surprise. But, with the improving sentiment in the FX market after the uneventful Jackson Hole symposium and the subsequent overall USD weakness, AUDUSD is unlikely to be depressed much even in this most dovish case," Citi adds.