Australian Currency Performance .....
Australia's currency has witnessed a sharply drop last week against its all major counterparts as the Reserve Bank of Australia (RBA) decided to leave interest rate steady for the sixth consecutive month at the highest level of 4.75% as the Bank aims to support the economy to exit from its recession phase after the first quarter contraction.
The Australian economy is still suffering from the natural disaster that has worst results on the economic cycle, while the Australian job advertisements slumped in May to the slowest pace in almost two years as the employment growth rate retreated.
The Government in Australia is always trying to help the economy to rebound, while it aimed to encourage companies to increase their expansion to help in hiring more workers, because of the Bank target to alleviate unemployment rates in the next phase.
The expectations indicate that the Australian economy is losing momentum as employers have added 30,900 new positions in the first five months of this year, the weakest job growth since 2009 and the second-weakest in a more than a decade, as manufacturing, services and construction lag behind a mining industry that is expanding to meet Chinese demand for raw materials.
On the other hand, the Reserve Bank of Australia warned that inflation to accelerate that pushed up by higher commodity prices.
Meanwhile, Australian monetary policy makers see that according to the financial conditions in Australia there may be a need to raise borrowing costs by 25 basis points in the 2nd half to contain inflation rates, also the Bank has warned that higher consumption will face with capacity constraints such as skill shortages affected by mining investment that the government estimates will reach A$76 billion ($82 billion) next fiscal year.
At the meantime, the commodities prices are going to increase as the gold may rise amid the U.S. economic recover will slow, boosted demand for the precious metal as a haven investment that will generate a new demand for Aussie.
Still investors are waiting important fundamental data that will confirm economic recover in Australia is to present positive steps in the second quarter of the year, while the global economy has a confidence for Australian economy.
In the week ahead, Australian dollar will move according to the market sentiment, while it will get pushes to help to return to the upside movement versus the majors as the business confidence, which will reflect investors' outlook for the economy.
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