Forex Investment and Currency Trading

Reserve Bank of Australia surprises with 25bp rate cut to 3.00% – likely to pause for a number of months
The Reserve Bank announced a 25 bp cut following it’s overnight Board meeting. For the last month some market analysts have argued that the Bank was likely to keep rates on hold for a number of months to assess the impact of the recent aggressive rate cuts and substantial fiscal stimulus packages which are being implemented by the Government. The other argument in favour of a pause was to allow the Bank to conserve some flexibility to deal with potential further [...]

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Australia: Rate Cuts Looming as the Economy Stalls

The RBA remains on track to deliver an interest rate cut during the December quarter. The first move may be a 50bp cut in line with the start of previous easing cycles.
The monetary policy easing cycle is likely to deliver 125 to 175bps of ratr reductions by the end of 2009. The cuts will be more than this if the commodity price bubble bursts within the next year.
As a result, the AUD is looking vulnerable to the downside, despite booming commodity prices. Flat GDP, an erosion of the interest rate gap and a [...]

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March housing finance

The total number of loans to owner-occupiers fell by 6.1% in March, following a 6.8% drop in February. Prior to that housing finance was relatively resilient.
One word of caution - it is possible that weakness in March was exaggerated because of Easter. The ABS advise that they (attempt to) adjust for this effect.
The impression is that weakness in housing finance is genuine. There are a number of indicators pointing to a significant interest rate impact (eg retail sales, consumer confidence, auction clearance rates, dwelling approvals and house prices).
Australians are delaying moving into the housing market as significantly higher [...]

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In a relatively quiet week, all eyes will be on the Australian quarterly inflation numbers and the RBNZ decision.
Australia: In an otherwise quiet week finishing with the Anzac Day holiday, some of the suspense has been taken out of the quarterly CPI data on Wednesday because: (a) there is a pretty good forecast of the outcome from the monthly experimental inflation gauge; and (b) the RBA has already said: “CPI data for the March quarter…likely to show inflation of around 4 per cent … Underlying inflation … (is also) expected to rise.” That is, markets have already priced in a [...]

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