May 1, 2012
AUSTRALIAN DOLLAR vs euro.vs doller
The Australian dollar ended the year above parity with the U.S. dollar. This symbolic level had been taken temporarily in early November before the rise in tensions in the eurozone does not diminish investor appetite for risk. The same scenario was repeated early this year, and the Aussie back down near $ 0.98 U.S.. Heavy rains and floods in parts of Australia have also contributed to this decline. Consequences are particularly apprehended on the country's coal exports and economic growth in general. The Reserve Bank of Australia may well have to stay on the sidelines a little longer.
Moreover, the correction of the Australian dollar is compatible with signals that were sent by the market indicators. Momentum and net speculative positions were at levels consistent with past turning points of the Australian dollar.
On a fundamental basis, the advantages enjoyed by the Australian dollar begin to fade. Although the Australian economy remains in good shape compared to most other industrialized economies, especially when looking at employment trends, signs of strain have recently surfaced. Particular, the real GDP growth increased from 4.6% in the second quarter, annualized rate, with only 0.8% in the third quarter. This is the worst performance of the Australian economy since late 2008. The completion of government stimulus packages and interest rate hikes have not been without effect on domestic demand.
A prolonged pause in monetary tightening in Australia seems increasingly likely. The only real irritant for monetary authorities remains the high inflation rate. The annual change in consumer prices has nevertheless declined in the third quarter, to 2.8%, and inflation expectations also show a decline. This is without counting the international situation which looks less favorable to Australia in the short term. In addition to continuing tensions in the euro area, China is now showing more determined to avoid an overheating economy, which should be reflected in increased exports of Australian raw materials. Moreover, a slight decline anticipated commodity prices in the short term should reduce the effect of wealth enjoyed by Australians.
by erectusplus at 5:34 AM |
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