K62 Finance

RBA rate hike hopes fade as Aussie bumps past US80c

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Original article by Vesna Poljak
The Australian Financial Review – Page: 15 : 28-Jul-17

The Australian dollar reached a new two-year high of US0.8043 during intra-day trading on 27 July, compared with $US0.76 at the start of the month. The currency rallied after the US Federal Reserve left interest rates on hold, and Charlie Jamieson of Jamieson Coote Bonds says a US rate rise in September is looking increasingly unlikely, while a rise in Australia’s cash rate will also be off the agenda in the near-term. Meanwhile, Westpac estimates that the Australian dollar’s fair value is around $US0.76 to $US0.77.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, JAMIESONCOOTEBONDS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, FEDERAL RESERVE BANK OF ATLANTA

‘Dangerous’ bank levy may have domino effect: Bligh

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Original article by David Crowe, Andrew White
The Australian – Page: 17 & 21 : 27-Jul-17

Australian Bankers’ Association CEO Anna Bligh has expressed concern that more state governments could implement their own version of the federal levy on banks. The levy is intended to boost government revenue by $A6.2bn, but Bligh has told the National Press Club that this impost could double if all states introduced their own levy. Bligh also supports Peter Costello’s call for banking industry executives to justify their high salaries, while she has questioned whether a royal commission into banks – as advocated by Labor – is appropriate and necessary.

CORPORATES
AUSTRALIAN BANKERS’ ASSOCIATION, AUSTRALIAN LABOR PARTY, AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, NATIONAL PRESS CLUB (AUSTRALIA), SOUTH AUSTRALIA. DEPT OF THE PREMIER AND CABINET, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF FINANCE

RBA dampens rate cut hopes

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Original article by David Rogers
The Australian – Page: 17 & 28 : 27-Jul-17

Reserve Bank of Australia governor Philip Lowe has signalled that the central bank will maintain its inflation target of 2-3 per cent. Meanwhile, new data shows that CPI growth in the June quarter was below expectations at 1.9 per cent, although growth in core inflation was in line with forecasts at 1.8 per cent. Shane Oliver of AMP Capital expects the RBA to leave the cash rate at 1.5 per cent until at least the end of 2018.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, AUSTRALIAN BUREAU OF STATISTICS, THE ANIKA FOUNDATION

Surging dollar threatens post-boom momentum as it tests US80c

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Original article by David Rogers
The Australian Financial Review – Page: 19 & 27 : 26-Jul-17

The Australian dollar has gained 3.5 per cent so far in July, and it remains close to a two-year high. The currency has risen by about 10 per cent in the year to date, and its trade-weighted index has risen by five per cent. The Australian dollar has benefited from factors such as a downturn in the value of its US counterpart and growing speculation that the Reserve Bank will increase interest rates in 2018. Greg Gibbs of Amplifying Global FX Capital says a further sharp fall in the value of the US dollar is possible given the US economic outlook.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMPLIFYING GLOBAL FX CAPITAL PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, THE ANIKA FOUNDATION, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, UNITED STATES. FEDERAL RESERVE BOARD

As good as it gets for the Australian dollar?

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Original article by Jens Meyer
The Australian Financial Review – Page: 20 : 25-Jul-17

A speech by Reserve Bank of Australia governor Philip Lowe on 26 July is likely to be closely scrutinised after recent commentary on a neutral interest rate target prompted the Australian dollar to rally. The currency peaked at a two-year high in response, although it retreated after deputy governor Guy Debelle downplayed the discussions about neutral rates. Paul Dales of Capital Economics expects the dollar to come under downward pressure, citing factors such as the outlook for interest rates and the iron ore price.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, AXITRADER PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, OANDA AUSTRALIA PTY LTD

NAB CFO hails APRA decision

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Original article by James Frost
The Australian Financial Review – Page: 16 : 24-Jul-17

The Australian Prudential Regulation Authority has set a new capital target for the banking sector, with the four main banks expected to have a common equity tier-one capital ratio of 10.5 per cent or more by 1 January 2020. Gary Lennon, the National Australia Bank’s chief financial officer, says it is well placed to reach the target, as it had a CETI ratio of 10.1 per cent at the end of March 2017. Lennon is supportive of APRA’s target, saying it will help to boost investor confidence in the banking sector.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Bankers ‘all smiles’ as capital angst ends

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Original article by Andrew White
The Australian – Page: 22 : 21-Jul-17

Macquarie Wealth Management says the nation’s four major banks should have no difficulty meeting the Australian Prudential Regulation Authority’s revised capital targets, given that their capital increased by between 30 and 50 basis points during the first half of 2016-17. The new minimum requirements for common equity tier-one capital were less onerous than had been forecast, which prompted renewed investor support for bank stocks on 20 July.

CORPORATES
MACQUARIE WEALTH MANAGEMENT, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, UBS HOLDINGS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Job surge adds to dollar’s strength

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Original article by David Rogers
The Australian – Page: 30 : 21-Jul-17

The Australian dollar peaked at a two-year high of $US0.7989 in local trading on 20 July, in response to data showing that 62,000 full-time jobs were created in June. The economy added a net 14,000 jobs, due to a sharp fall in part-time positions, and the unemployment rate was steady at 5.6 per cent. Capital Economics’ Katie Hickie says the Reserve Bank is likely to leave official interest rates on hold until at least the end of 2018, arguing that growth in wages will be limited by excess capacity in the labour market.

CORPORATES
CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA, HSBC AUSTRALIA HOLDINGS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, EUROPEAN CENTRAL BANK

Banks dodge a capital bullet

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Original article by Andrew White
The Australian – Page: 17 & 21 : 20-Jul-17

The Australian Prudential Regulation Authority will require the nation’s four major banks to have minimum common equity tier-one capital ratios of 10.5 per cent from 2020. The new capital requirements are part of APRA’s strategy for ensuring that local banks are "unquestionably strong". Investors responded positively to the revised capital rules, which were less stringent than had been anticipated, with shares in local banks rallying on 19 July. The capital ratios of most of the major banks are already close to APRA’s proposed new minimum.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, YARRA CAPITAL PARTNERS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, SHANGHAI RURAL COMMERCIAL BANK

RBA sending a warning shot on rates: Edwards

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Original article by David Rogers
The Australian – Page: 17 & 28 : 20-Jul-17

Economist John Edwards recently suggested that Australia’s economic outlook could potentially prompt the Reserve Bank to lift the cash rate from 1.5 per cent to 3.5 per cent by the end of 2019. The minutes of the central bank’s latest board meeting indicate that it now has a "neutral" nominal cash rate target of 3.5 per cent. Edwards says it is quite possible that official interest rates could rise to this level, and he anticipates a rate rise in March 2018. Paul Bloxham of HSBC forecasts a rate increase in the March 2018 quarter.

CORPORATES
RESERVE BANK OF AUSTRALIA, HSBC AUSTRALIA HOLDINGS PTY LTD, DEUTSCHE BANK AG, GOLDMAN SACHS AUSTRALIA PTY LTD, LOWY INSTITUTE FOR INTERNATIONAL POLICY