Reserve Bank of Australia keeps rates on hold 2012.04.03

April 03, 2012 23:32

 

Australia’s retail sales increased a seasonally adjusted 0.2% in February 2012 to $20,987.7 million from the month before. This follows a seasonally adjusted 0.3% gain in January 2012 from December 2011, which had been unhanged (0.0%) from the previous month. In a matter of trend, the country’s turnover moved up 2.5% in February 2012 from February 2011. Particular states within the country were responsible for the trend increase including Queensland up 0.4%, Western Australia up 0.6%, the Australian Capital Territory up 0.4%, and the Northern Territory up 0.2%. 

 

 

 

In other country news, the Reserve Bank of Australia (RBA) left the country’s cash rate unchanged at 4.25%. The bank expects the world economy will grow at a below-trend pace in 2012 but does not see a deep downturn occurring. Some countries in the European region are expected to report weak outcomes while the US is expected to continue increasing at a moderate rate. China’s growth is expected to continue the moderation it has experienced. Other parts of Asia, which have shown economic softening in 2011 due to disastrous weather conditions, are not expected to recede any further. Commodity prices in Australia have lowered for a few months in 2011, permitting the RBA to ease monetary policy somewhat.

Financial sentiment has improved somewhat within the country with capital markets supplying funds to corporations and well-rated banks. Furthermore, domestic demand carried through at its fastest pace in four year in 2011 due to increased private spending.

The AUDUSD has fallen towards support at 1.0320 as it appears that the RBA is dovish and is not likely to raise interest rates soon. Recent reports from the U.S. have indicated the Fed is becoming less dovish and reluctant to implement further QE. This has strengthened the Dollar and put further downward pressure on the AUDUSD. We expect the AUDUSD to target 1.0100. 

 

Eugene Ross, Analyst

Admiral Markets

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