Aussie Posts on Forex Blog
RBA Joins Wait and See Crowd, Holds
Aug 4, 2008
The Reserve Bank of Australia has officially joined the tide of wait and see.
As expected by just about everyone, they held rates steady at 7.25%.
But despite early market anticipations for a rate cut by October, and a slew of negative economic data, their statement remained considerably hawkish.
"The rise in Australia’s terms of trade that is currently occurring is...adding substantially to national income and ability to spend. At the same time, high prices of oil and a range of other commodities have added to global inflationary risks. They are also dampening growth in a number of countries."
Note the 'other countries' comment. Clearly, the RBA remains convinced Australian commodities will remain a source of growth forth foreseeable future.
As most expected, the RBA did caution on growth.
"The evidence is that the tightening in financial conditions, in conjunction with other factors including rising fuel costs, and lower asset values, has restrained demand...credit expansion to both households and businesses has slowed significantly. Surveys suggest a softening in business activity, and there have also been some early signs of an easing in labour market conditions."
Like Europe and so many other countries, the Australians are starting to see signs of a slowing economy. Nevertheless inflation remain s a concern for the short term.
"On balance, however, it is looking more likely that demand will remain subdued, and economic growth will be fairly slow, over the period ahead. Inflation is likely to remain relatively high in the short term, with the CPI affected by high global oil prices. Looking further ahead, inflation in both CPI and underlying terms is likely to decline over time, given the outlook for demand, provided wages growth remains moderate. The Bank’s forecast remains that inflation will fall below 3 per cent during 2010."
Like most of the industrialized world, a conundrum of sorts has formed. Caught between inflation pressures and early signs of a slowing economy, the RBA must wait for a clearing of the economic waters.
Welcome to the world of wait and see Governor Glenn Stevens.
Carry Trade, AUD, Aussie, RBA, Reserve Bank of Australia
Aussie Dollar Falls on Unemployment Rpt
Jun 11, 2008
The June labor force report from the Australian Bureau of Statistics (ABS) showed an unexpected increase in unemployment. April was revised higher to 4.3%, while May held steady at 4.3%. Specifically, the total number of people employed fell 19,700.
Expectations had been for a drop in unemployment to 4.2% with an increase in jobs by 13,500. Subtracting the real drop vs expected growth reveals a 33,200 swing in jobs. This is the first decrease in employment since October 2006. The loss was evenly split between full-time (- 53% 10,400) and part-time (-47% 9,300).
10.69 million people remain in employment.
Combined with yesterday's fall in Australian consumer confidence (-5.7%), the chances for a rate hike seem remote. Some economists now see rate cuts starting in 2009.
In early hours of the Asian session, the Aussie has fallen against most of the majors. The AUDUSD fell to a new multi week low as the currency traded from A$0.9406 down to A$0.93920.
Other forex trades: AUDCAD A$0.95810 (-0.13%), AUDJPY A$100.66 (-0.09%), EURAUD €1.6485 (+0.04%).
jobs report, AUD, Aussie
Go Oz! Minutes from May 6 RBA Meeting Sends the Aussie Dollar to 24 Year High
May 19, 2008
The Reserve bank of Australia released their minutes from the May 6th meeting today. During that meeting, they held rates steady at 7,25%. However, the minutes show policy makers spent a great deal of time discussing a further rate hike. Inflation "was uncomfortably high" for many policy makers.
The Australian Dollar is up 12.8% vs the US Greenback so far this year. With an upside bias, and New Zealand falling off the rate hiking bandwagon, the trend may continue. According to Okasan Securities, the Aussie currency has broken a trendline from 107.87 (Oct 31) - 99.84 (May 7), suggesting a move to as much as 100.35.
Read more at Bloomberg
AUD, Aussie, RBA, Reserve Bank of Australia
Job Reports, Inflation Drive Australian dollar Up, New Zealand dollar Down
May 8, 2008
New Zealand reported the largest decline in employment in 19 years yesterday. The deterioration of New Zealand's economy in recent months has shown that the Central banks efforts to cool the economy have largely worked. Many forex traders now believe the central bank will begin to cut rates from the record 8.25%. Rates may fall as much as 1% in the ne3xt year according to a Credit Suisse Index.
In Australia, jobs grew for a record 18th month, and the central bank raised inflation forecasts. Australia's dollar was trading at NZ$1.2187 (+1.2%).
read more at Bloomberg
jobs report, AUD, Aussie
