Aussie Rate Decision Due 2012.03.05

March 05, 2012 19:35

The Australia and Zealand Banking Group Monday published Australia’s February job advertisements rose 3.3%, indicating a strengthening labor market. The country had experienced a 7.5% increase in internet and newspaper job advertisements in January. The February figure is the highest amount seen since November of 2008. The increase was largely a factor of internet advertisements, higher 3.8% for the month and 4.9% greater than a year ago as newspaper advertisements fell 8.6% in the month and 22.3% lower from a year ago. The growing trend decreases the likelihood the Reserve Bank of Australia will apply additional monetary easing for the country.

In other Australian news, The Australian Industry Group published their performance survey of the country’s service industry Monday. The survey is a composite of performance indicators including employment, sales and activity, new orders and supplier deliveries that have varying magnitudes. The February 2012 performance of service index (PSI) came in at seasonally adjusted 46.7, 5.2 points less than the previous month’s 51.9. An index above 50 indicates growth whereas an index below 50 indicates contraction. orders came in at the lowest level reported in over 12 months.

The Reserve Bank of Australia is expected to keep rates on hold at 4.25% at its policy decision tomorrow. The RBA surprised markets last month when it kept rates on hold despite expectations of rate cuts. The RBA has become less dovish as it feels that financial situation in Europe has stabilized due to the massive supply of liquidity from the European Central Bank. The Aussie employment report due later this week is also expected to shed further light on the employment situation. With the RBA reluctant to cut rates, we expect the AUDUSD to rally higher on renewed risk appetite. The AUDUSD might make a run for highs of 1.1000 which was established in July 2011.

Eugene Ross, Analyst

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