[AndrewWoo]

One of the major arguments against further easing from the RBA is the risk of
igniting the developing recovery in the housing market. Analysts expect interest rate expectations will be volatile over the next few months as the market digests very mixed data but some would look to fade speculation the RBA will ease rates again this cycle. As the 30 day interbank cash rate futures market is currently discounting approximately 40% probability of a rate cut by October, AUD remains attractive on eventual upward rerating of interest rate expectations. Favoured longs are versus USD and with recent data showing resurfacing demand from Japanese investors for foreign assets, also favour buying dips in AUDJPY for a rally back toward 82.00.