Talk of weakness in the Australian economy is overdone and the RBA should hold rates steady this month, says Greg Gibbs, currency strategist at RBS. With so much to unfold over the rest of the month, including key Australian data releases such as GDP on Wednesday and labor force data on Thursday, the "prudent and sensible" approach for the RBA is to hold fire on delivering back to back cuts, but say they are seeing bigger downside risks for the economy and are prepared to ease policy if these risks become clearer, Gibbs says. The RBA policy decision is due at 0430 GMT. Given the market positioning has become record short in the AUD last week, the risk is greater for a further short covering squeeze. The AUD/USD is now at 0.9747.
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