Via a National Australia Bank research note, noting comparisons and differences between where Canada and Australia are at in their rate cycles

The basic gist of the piece (which is quite long and detailed, this is a summary, bolding mine) is to see if the Bank of Canada's move has any implications for the RBA

We find that economic performance in Canada has been considerably stronger than in Australia over the past 9-12 months

  • strength in Canadian GDP
  • retail sales
  • and consumer confidence

This has seen the Canadian unemployment rate drop nearly one percentage point since October to near pre-GFC lows

  • That said, the Bank of Canada's move was also driven in part by the desire to remove some of the stimulatory policy setting currently in place in Canada.

Are there any parallels with Australia?

  • At some stage, the RBA is also likely to seek to wind back some of this accommodation, likely well before the inflation rate is back at the centre of the 2-3% target band and before all the slack in the labour market is used up.
  • Like Canada, this is likely to require broader strength in the Australian economy, together with a clearer decline in the unemployment and underemployment rates and confidence that the inflation rate back will return to target.
  • In recent months, the NAB Business Survey has suggested that the improvement in business conditions has broadened ... but for now, the states most exposed to mining continue to exhibit a drag on the Australian economic outlook, suggesting a near-term move by the RBA remains most unlikely.
  • Clients should continue to monitor indicators that suggest the drag from WA and QLD may be lessening along with unemployment and underemployment trends, as these will likely be important for timing when the RBA will begin to normalise interest rates.
  • The current differential in Canadian and Australian economic performance suggests to our FX strategists that the Canadian dollar can continue to outperform the Australian dollar.