Bank of America Global Research discusses its expectations for tonight's RBA policy meeting.
"Spare capacity & a strong AUD means it is too early to expect a signal on tapering from the RBA despite better economic data. We expect QE to be extended for another six months to limit AU rates underperformance. RBA is set to highlight flexibility," BofA notes.
"In this context, guidance from the RBA will be important for AUD/USD - a commitment to bond buying, coupled with the recent decline in real rate differentials and iron ore prices suggests risk of a correction toward 0.75 in 1Q," BofA adds.