Monday May 17, 2010 - 09:41:52 GMT
Share This Story
Imperial FX Online - www.imperialfxonline.com
Market Focus Report: RBA May meeting minutes may contain clues of an upcoming rate pause
Strategize Your FX Trading Now!!
RBA May meeting minutes may contain clues of an upcoming rate pause
INTEREST RATES MOVING CLOSER TO 'AVERAGE'
The Reserve Bank of Australia rose interest rates for the sixth time in seven meetings on May 4, raising the cash rate to 4.5%, which is 150 basis points above the recent low of 3% seen in mid-2009. The somewhat aggressive pace of monetary policy has been attributed to a robust labour market in Australia and its relative sheltering from the brunt of the global economic crisis due to its geographic location and its mining industry. The increase in the inflation rate to 2.9% (close to the upper range of the central bank's target of 2-3%) has also alerted the central bank to the risk of inflation as the economic recovery continues.
The latest comments from RBA Governor Glenn Stevens have sounded less hawkish than in the past as he noted that interest rates are returning to 'average' levels and although the minutes for the April meeting suggested that the central bank should delay in moving interest rates, interest rate futures markets are beginning to show an increasing likelihood that a pause at 4.5% may be seen at the next meeting on June 1. There were earlier rumours of a pause when rates were hiked to 4% due to the statements in the meeting minutes that the RBA had room to decide the timing of its rate increases, however, the improvement in Australian economic data for the first quarter of 2010 forced the central bank's hand.
Analysts will be scouring the minutes for May's meeting for any change in the language regarding future monetary policy while also looking out for any comments regarding the latest developments in Europe and the debt contagion there, as this could indirectly influence the RBA to keep rates on hold in June and even July. The bearish momentum seen recently in the Australian dollar may intensify and put the major support at 0.8578 (February low) in focus.
Disclaimer: Imperial Forex has taken reasonable measures to ensure the accuracy of the information of this article, however, does not guarantee its accuracy, completeness and timeliness, and will not accept liability for any loss or damage which may arise directly or indirectly from the content. Imperial Forex will not accept any liability for loss or damage as a result of reliance on the information contained within this article or on its website including data, quotes, charts and buy/sell signals.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."