After excercise quite a narrow channel in the last three weeks, the Aussie jumped over par last night and now looks pretty close to support near 1.0060. Such blatant price movements contributed a combination of internal and external factors. While the RBA decided last night to leave unchanged target interest rate unchanged at 4.75%, the tone of commentary was clearly positive. Australian central bank noted a dramatic expansion of China and India (the two main trading partner countries), he also recalled that the global economy looks strong in early 2011, and also mentioned that the volume of trade in Australia was the highest since 1950 (ie, confirming that National income increased sharply). In addition to all the RBA noted that the accelerated growth of wages, and flooding in Queensland and Victoria will have a temporary effect on prices. In the end, it was more hawkish than many expected.On the external background helps Aussie continued growth in commodity prices and a weakening dollar. Yesterday, Brent over $ 100 per barrel, coal prices have reached record highs, and aluminum and nickel rose to a two-year highs. The price index of food from the Food and Agriculture Organization of the United Nations reached a maximum in December.
Commodity prices are a double edged sword for the currency. High / rising prices for raw materials - particularly base metals - generally very helpful Aussie. On the other hand is growing concern over Asia and other emerging economies, where prices for key products and materials is already very high. This leads to the fact that many central banks have already put the screws on monetary policy at a time when higher inflation has led to a significant tightening of financial conditions.
In fact, the lack of dynamics in early 2011 clearly reflects the complexity of this prediction of future developments in the forex market. The Australian dollar is simply the worst among the major currencies since the beginning of the year, it loses 5% to the pound, the euro 4%, while the dollar 1.7%. Increased hysteria against inflation in developing countries represents a major threat to the Aussie in the short term. Will therefore not surprising to see further reductions in Long Aussie in the near future.
Translate this page
