After another few days of “will he won’t he” speculation, Governor Glenn Stevens has left the Official Cash Rate (OCR) on hold at 2% for the sixth consecutive month. Last week’s disappointing inflation data, along with the big 4 Australian banks raising their interest rates had given fuel to the fire that the RBA may cut rates and help ease the burden of Australians in the lead up to Xmas, and help boost retail spending, instead of increased pressure of mortgage repayments. However those with a bet on the 80/1 Prince of Penzance will have plenty of money for Santa.
“Low interest rates are acting to support borrowing and spending,” Stevens said. “While the recent changes to some lending rates for housing will reduce this support slightly, overall conditions are still quite accommodative.
The AUD/USD exchange rate saw an initial spike above the 0.72c mark before easing slightly and currently trading at 0.7180 this morning.
The first announcement for Wednesday has been delivered with the NZD Unemployment rate rising from 5.9% in Q2 to 6.0% in Q3. After the AUD/NZD saw a fight back yesterday and moved between $1.0502 at the start of the day & $1.0798 at its highest point we are now seeing the AUD/NZD exchange rate at $1.0785
The volatility will continue today for the AUD, against the USD, GBP & NZD with a plethora of high tier announcements due on Wednesday. The local economy is expecting Retail Sales figures to remain steady at 0.4%, and a slight improvement in Trade Balance, these results could continue the AUD short term revival. Shortly after that the Chinese Caixin figures will continue the week’s releases, today announcing the Composite & services data, the AUD investor’s will be hoping the better than expected trend continues for the Chinese data and help keep the AUD stronger.
The UK will release the Markit UK service PMI which is forecast for a slight improvement of 53.3 to 53.6 in which will show a slight increase month on month, however still a far way off the 58.5 in June which started to create speculation about the UK interest rate increase in 2015, however after the recent drop those cuts now seem at least a 2016 movement.
The AUD/GBP exchange rate is trading at 0.4655 at 09:00am today.
Later this evening will see the release of the USD Trade Balance, expected to drop from $48.33B in August to $41B September which will again keep the AUD/USD at the forefront of investor’s minds.