UBS interest rate strategist Matthew Johnson said the RBA's change of view surprised the market. "The market had expected that the RBA would use today's statement to develop on the themes from the June minutes that they can't be sure they've done enough," he said. "They didn't do that and they didn't take the chance that they had to downgrade (their forecasts for) global growth or domestic growth or the labour market because of the softer tone of the recent data. "Because of that we've seen a sell off.
Markets will also be watching the release of official May retail spending figures and building approvals data, both out on Thursday. "Understanding the tight federal budget's impact on consumer confidence and retail sales in particular is very interesting," Mr Johnson said. "We're predicting a 0. 5 per cent drop in retail sales on Thursday, reflecting that drop in consumer confidence.
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