No surprises yesterday from the RBA with the Reserve Bank of Australia holding rates steady at 1.5%, however suspicions continue to grow that the next move from the RBA could be a rate cut as opposed to a rate hike given economic activity remains quite sluggish. A lower Aussie dollar would certainly support the iron ore miners and exporters but the rate cut itself could further fuel the east coast property market which has only just started to cool, so there is somewhat of a catch-22 for the RBA as to their next policy decision.
Stocks finished mostly lower overnight in Europe and the U.S following the lead of Australia and Japan yesterday where indices lost 1.5% and 1% respectively during a pretty negative session. Iron ore prices also fell but continues to hover around US$55 a tonne, a level which keeps most iron ore miners in business.
Ahead today is further local economic data namely quarterly GDP figures. Expectations are for growth to be around 0.2% but another negative figure as we saw for the December quarter last year could see AUD markedly lower on increased expectations of a rate cut as mentioned above. Let’s keep a close eye on AUD today.
DATA RELEASES TODAY:
AUD – Quarterly GDP Figures at 11.30am
AUD EXCHANGE RATES:
AUD/USD – 0.7483
AUD/GBP – 0.5791
AUD/EUR – 0.6631
AUD/NZD – 1.0431
AUD/JPY – 81.901
***Above rates are indicative wholesale rates and intended as a guide only***
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