The Australian Dollar gained some much lost ground on the back of what was an expected hold on the official cash rate at a record low of 2.5% yesterday. This extends the RBAs decision to keep rates on hold to a period of 14 months without change.13 economists were polled as to their predictions for interest rates and they were dead on the mark. Of the 13 polled, eight also believe that the next move in interest rates would be a hike in the first 2 quarters of 2015.
This gave a lift to the Australian Dollar against most of the majors which both held and extended overnight into the U.S session. If these economists are correct this would be the first rate hike in a little over 4 years .Of all the currency pairs the Aussie Dollar trades against, the AUDNZD is looking most bullish where it is trading within a stone’s throw from the 12 month high set back in September which sits around 1.1290.
In other news, over night the U.K released Industrial Production which stalled for the month of August yet YOY figures were considerably more positive. The reason given for the monthly reading was shutdowns in various North Sea facilities which sent oil and gas extraction lower by 1.7% .Monthly manufacturing production also came in line with expectations with a rise in the headline number to 0.1% from the previous month of July.
Bank of England Chief Mark Carney and his fellow Governors’ kicked off their monthly policy meeting last night. Though some of the economic data of late has showed positive signs of a stronger than expected recovery, this has been tempered with signs of a slowing in the U.K economy which has led to some dissention within the BOE as to the future direction interest rates.
Finally U.K GDP rose 0.7% to the end of September, but this was lower than the previous 0.9% for the second quarter signalling a slowdown in the U.K economy which has been likened to a runner who has gone from a run to a slow walk .The British Pound headed lower against the Australian Dollar losing half of 1% to end the day close to a 2 week low at 1.8273.