Australian bonds gain as investors await RBA policy meeting, Governor Lowe’s speech

The Australian government bonds gained Monday as investors are eyeing the Reserve Bank of Australia’s (RBA) monetary policy meeting, scheduled to be held on May 2, amid a session of muted market movements as most markets remain closed on account of Labor Day.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 1 basis point to 2.58 percent, the yield on 15-year note slipped nearly 1/2 basis point to 2.98 percent and the yield on short-term 3-year also traded 1/2 basis point lower at 1.81 percent by 04:50 GMT.

"The Reserve Bank of Australia faces a similar paradox at this stage of the economic cycle. In our view, Australian economic fundamentals do not necessarily suggest that the RBA is likely to cut rates further at this time, but they certainly suggest sustained accommodation for quite some time. After assessing on all these factors, our baseline expectation is that the RBA remains stuck in its “Catch-22” situation and will therefore make no changes to the cash rate anytime this year and likely well into next year, a consideration which should have key implications for the Australian currency," Wells Fargo Securities commented in its latest research report.

Meanwhile, the ASX 200 index traded 0.31 percent up at 5,923.50 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -110.09 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex