Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.
Well that might just be it for the time being for the AUD’s good little run with the local currency making a swift retreat from the 0.7100 level vs the Greenback but is also lower against all the other majors. The Home Price Index was released yesterday and showed that in the December quarter prices declined by 2.4% nationally taking the total losses for the full year to around 5.1% nationally with Sydney and Melbourne the worst performers. More recent data for the latest quarter won’t be released by the ABS for another 2 months, however CoreLogic’s more recent data is showing continued steep declines.
While the RBA have watched the deteriorating housing market and lending conditions, in their minutes released yesterday they suggested that a lack of dwelling investment was expected to subtract from growth and the decline “could be sharper” than currently expected however “members agreed that there was not a strong case for a near-term adjustment”. Strange when you consider that our economy is built on just a few pillars of which housing is a major part. I think a rate cut is still likely at some point this year. As such for Importers Forward Contracts in my opinion are the best way to play the current scenario especially if protecting your costing levels is the main focus.
U.S Interest Rate Decision:
The FOMC meet to set U.S interest rates early tomorrow morning, however no change is anticipated as the U.S Fed take a wait and see approach to monetary policy. The market may still move on comments from Jerome Powell, so clients wishing to avoid risk should probably book USD payments today.
AUD EXCHANGE RATES:
AUD/USD – 0.7056
AUD/GBP – 0.5310
AUD/EUR – 0.6210
AUD/NZD – 1.0309
AUD/JPY – 78.639
All Ords (XAO) – 6,276
Gold – A$1,843/oz
Silver – A$21.69/oz
WTI – US$59.29/barrel
DATA RELEASES TODAY:
GBP – CPI at 8.30pm
USD – Federal Funds Rate & FOMC Statement at 5.00am (tomorrow morning)
Sign up for a Compass account today and access some of the most competitive rates in the business and arguably the best service.
Senior Corporate FX Dealer
Phone Patrick – 0431 278 632
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