AUD- Key points from RBA statement today. Sounds like a steady policy outlook for a good while.
"...Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices. Production losses due to weather are temporarily raising prices for some agricultural produce, but these should fall back later in the year. Overall, looking through these temporary effects, the Bank expects that inflation over the year ahead will continue to be consistent with the 2â€“3 per cent target.
At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate in view of the general macroeconomic outlook."
GVI Forex john 14:24:47 GMT - 03/01/2011
from official statement..
Note in chart. Bank of Canada core CPI target is the red bar. They are shooting for 2.0%
Dovish BOC decision
"... While global inflationary pressures are rising, inflation in Canada has been consistent with the Bank's expectations. Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the economy.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered."
GVI Forex Jay 11:36:11 GMT - 08/31/2011
Month end flows can be tricky and adjustment in hedges are often a factor. The following article fromEFX News (poste don the FF) illustrates this point. If you have questions on it, please click reply and post on this thread.
From an EFX news article posted on the FF:
Foreign Investors Will Be Net USD Buyers -Citi
31 Aug 2011 04:26 EDT
Dow Jones via eFXnews
Citi says foreign investors will be net USD buyers at the end-of-the-month fixing according to its model's estimate. "The model's strongest signal is to sell EUR/USD, as European investors are expected to buy USD to bring their hedges into line with lower US equity values," Citi says.
Adds that foreign investors will be net sellers of EUR and other European currencies because European bonds have outperformed other fixed income markets in August.
The model also produces a weak signal to sell USD/JPY because both foreign and Japanese investors are seeing as net JPY buyers to reduce hedges on Japanese equities and to increase hedges on foreign bonds.
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