New home sales in Australia continue to show improvement one month followed by a poor number the next month .In May we had a positive reading of 2.9% to then be bought down to earth by Junes abysmal reading of negative 4.3% .Low interest rates do take a while to flow through to the real economy and I’m sure Glenn Stevens, the Governor of the RBA is keeping a keen eye on these Stats to see if he needs to remain where he is on his Interest rate policy of rates on hold, to potential looking at more cuts going forward.
Speaking of which we have the RBA rate decision being released at 2.30 aest and analysts are unanimous in their estimation of rates remaining on hold at 2.5% but it is the accompanying speech from Stevens that will tell us where he and fellow governors mindsets are in respects to further cuts in the future .The gauge on how the market will digest Governor Stevens speech will be the Australian dollar .
If he is leaning to future cuts, we could very well see a softening in the Aussie,and rates on hold or a more hawkish stance, and we could see a continuing rally compared to its U.S counterpart and a reversal in fortunes against the Pound.
Across the Atlantic we had Euro zone CPI or Consumer Price Index, which is a measuring stick n how Inflation is tracking, forecasts of inflation remaining at 0.7% as in previous months. But we had a surprise to the upside with a reading of 0.8%, so finally are we starting to see some kind of tangible recovery in the Euro zone, well investors certainly thought so last night as the Euro had one of its largest one day rallies since mid April to end the session on the high of day .