Forex Investment and Currency Trading

The RBA remains on message: an outperforming Asian region; local economy performing better than expected; in due course “less expansionary” policy required. 
However, there is still caution and balance throughout the minutes where “some uncertainty remained about the outlook both abroad and at home”. 
Critically, there was again no mention of the cash rate being at “emergency levels”, and that the emergency no longer exists.  Was the Governor’s strong semi-annual testimony language a red herring?
The soft tightening bias was a repeat of last month where “if the economy evolved as anticipated in the forecasts, the Bank would in due course need to [...]

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This is an important week for Australian markets, coming in the wake of the Reserve Bank of Australia’s (RBA’s) comments last week, which appeared to signal a change to a neutral from an easing policy stance. Today, we have monthly home loans, investment lending, and value-of-loans data for June. Home loan growth bounced sharply from a low of -3.1% in September 2008 to 6.5% in December 2008, but since then has moderated to 1.8% in April and 2.2% in May. Business and consumer confidence indicators are released on Tuesday and Wednesday, followed by the Q2 wage cost index on Wednesday [...]

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As expected, the Reserve Bank of Australia decided to leave the cash rate unchanged at 3.00%.
The most important aspect of the Governor’s Statement was the all important final paragraph where the term “some scope for further easing of monetary policy” was replaced with “monetary policy is appropriate”. This is a clear shift in the policy bias from an easing bias to a neutral bias. The significance of this change is also emphasised by the addition of the term “achieving the inflation target” when describing the factors that will affect future policy decisions. In all recent prior Statements, the only target [...]

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The AUD has appreciated strongly in conjunction with the rally in stocks. Indeed the Aussie has outperformed all the other majors since March 9th, supporting the trade idea of long recommendation in AUD/JPY.
Last week brought a string of positive data surprises. Retail sales continued to surprise on the upside helped primarily by the fiscal boost from the government and the rapid flow through of easier monetary policy. The housing market is showing signs of life given the pick up in building and mortgage approvals, although house prices are continuing to fall. Finally, Australia’s external balance has improved due to the [...]

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