Over the past two weeks, the world’s central banks have initiated a whirlwind of rate cuts. These surprise moves, or what we colorfully termed “the cavalcade of jaw droppers,” have increased the likelihood that the Reserve Bank of Australia (RBA) will also cut rates.

The only question that remains is the timing of the central bank’s next move. The RBA has been on a rate-cutting cycle since late 2011, eventually lowering the rate to an all-time low of 2.5% in August 2013.

Since then, the RBA has maintained its benchmark cash rate at that level, while trying to achieve policy ends such as a lower exchange rate through the power of its bully pulpit. The effect of so-called jawboning, which in this context describes the effort of talking a currency lower, tends to be ephemeral at best.

Instead, the biggest factors in the Australian dollar’s decline over the past year-and-a-half have been the U.S. Federal Reserve’s shift to a more hawkish stance on its monetary policy and, of course, the end of the global commodity super cycle, marked by price collapses in key commodities ranging from iron ore to crude oil.

Still, RBA Governor Glenn Stevens has made it quite clear that he believes economic fundamentals warrant the aussie trading around USD0.75. That’s a far cry from the currency’s post-Global Financial Crisis high of USD1.10 back in mid-2011, or even last year’s high of USD0.95.

Now that the Australian dollar is trading just below USD0.78, it appears that Mr. Stevens has nearly gotten his wish.

Policymakers believe a lower exchange rate will help the economy find new growth from other sectors now that the peak in mining investments is well past.

Indeed, a recent survey of the nation’s top economists conducted by The Australian shows that a majority believe further easing is necessary to rebalance the economy after its overreliance on a decade-long commodities boom fuelled by what had been seemingly insatiable Chinese demand.

To be sure, Australia’s proximity to emerging Asia is still a big part of its investment story. But for now, China’s economic growth, though still heady by developed-world standards, is decelerating as the country turns inward toward a more consumer-driven economy.

The resulting decline in economic activity has been enough to cause a plunge in the price of iron ore, which is by far Australia’s top export and China its top destination, of similar magnitude to that of crude oil.

With rates already at historically low levels, the RBA had been in a tough spot prior to this point. While another rate cut would help prime the economy, it could also further inflate the country’s already-worrisome housing bubble.

However, now that its central bank peers are suddenly in easing mode, the RBA is essentially being forced to follow suit. Indeed, the exchange rate’s nearly 5% drop since mid-January seems predicated on expectations of an imminent rate cut.

According to futures data aggregated by Bloomberg, there’s a 56% probability of a quarter-point cut at next week’s meeting.

In fact, traders as well as a number of economists expect at least two rate cuts this year. A plurality of traders expect the cash rate to fall to 2% by the April meeting, while a substantial number of traders are starting to bet on a cash rate of 1.75% in the second half of the year.

Nevertheless, some central bank watchers believe that fourth-quarter data for Australia’s consumer price index (CPI), which showed that underlying inflation, which strips out volatile items such as energy, rose at a faster-than-expected pace, could keep the RBA in a holding pattern.

According to The Australian, they say that the typically cautious central bank should take the interim step of first removing the guidance from its policy statement that says, “the most prudent course is likely to be a period of stability in interest rates.”

But given the dramatic moves over the past two weeks, these aren’t normal times. And the RBA may be forced to act simply to keep up with its peers.

Portfolio Update

By Khoa Nguyen

News of a possible Macau resurgence propelled shares of Crown Resorts Ltd (ASX: CWN, OTC: CWLDF) up 17.5% over the past five trading days, including an 11% rally in the past two days–its biggest two-day gain in five-and-a-half years.

This surge was due to news that Macau’s gaming industry rose 6% for the week ending Jan. 25 compared to a week earlier. The news lifted all Macau casino stocks in general. 

In 2014, Macau reported gambling revenues fell 2.6% to USD44 billion, its first negative growth since figures were calculated in 2002. The drop in revenues was mainly due to a government crackdown on corruption, which involved many top officials in China. This led many high rollers to avoid Macau’s table games.

With the recent data, analysts now believe that revenues have finally hit rock-bottom and are set to recover this year. The Macau Monetary Authority also announced it estimates growth in 2015 at a low single-digit pace.

While Crown mostly operates in Australia, it has significant exposure to the Las Vegas of Asia via its 34.3% stake in Macau-based Melco Crown Entertainment Ltd (Hong Kong: 6883, NSDQ: MPEL). Melco Crown’s two casinos in Macau, the City of Dreams and Altira, offer prime growth potential in the world’s biggest gaming market.

Following the news, Goldman Sachs raised Crown Resorts to a “conviction buy” with a price target to AUD17.50. Shares of Crown are up 7.3% year to date after falling 22.9% in 2014.

Oil Search Ltd (ASX: OSH, OTC: OISHF) reported fourth-quarter production of 7.24 million barrels of oil equivalent (mmboe), almost four times the 1.7 mmboe in the corresponding quarter last year.

Full-year production was up 186%, to a record 19.27 mmboe, compared to 6.74 mmboe in 2013. Production finished toward the higher end of the company’s guidance range of 18 mmboe to 20 mmboe.

Total sales volumes jumped 164%, to 17.76 mmboe, compared to 6.73 mmboe in 2013, while total revenues surged 168%, to USD562.1 million.

The strong growth was driven by its PNG LNG Project, which completed its first full quarter of production, contributing 5.49 mmboe in the fourth quarter. PNG LNG represents about 29% of Oil Search’s total production.

Due to the collapse in crude prices over the past several months, the company is reconsidering its strategy for deploying capital. Its plans for 2015 are currently being finalized and will be provided at its 2014 full-year results announcement on Feb. 24, 2015.

In the fourth quarter, the company spent $214.1 million on exploration, development and production. Spending on the PNG LNG Project fell by over 50%, to $59.3 million, as development activities wind down.

The company emphasized that a majority of its production is still profitable despite falling oil prices. With its strong balance sheet, including $960.2 million in cash and another $600 million in liquidity from undrawn funding lines, the company believes it has the financial strength to endure the challenges facing the energy sector.