Glenn Stevens has been quite insistent in recent statements that Australian interest rates are still 50 or 75bps below the ‘new normal’ and that the housing bubble is of growing concern. This tone hasn’t changed recently and that is why I think the RBA will hike by 25 bps later today and leave room for another rise in two months time. The poor retail sales number will be in the back of their mind, not to the fore front, and they will start to take more heed if we get two bad numbers in a row. I’m still running a very stale short AUD/USD position which I’ll exit on a break above .9250. Another level to watch in case of a jump in the Aussie is 87.90 in AUD/JPY, which is the 61.8% retracement of the big fall from 107.90 to 55.50.