Earlier today we had the release of Australia’s latest Gross Domestic Product (GDP) figures refers to the market value of all officially recognized final goods and services produced within a country in a given period and is viewed as an indicator as to the overall performance of and economy. Figures released were revised figures from Quarter four of 2011 and was expected to come in at 0.8% but was actually 0.4% The figures still highlight that the Australian economy is expanding and if you contrast this to the UK’s recent revised GDP at -0.2% showing a contraction for the economy, the figures still make for far better reading than the current situation facing the UK.
What now for the AUD?
Earlier this week we also had the Reserve Bank of Australia release its latest interest rate decision. The base rate was kept on hold at 4.25% with many analysts expecting a rate cut. In the run up to the decision the AUD had weakened in anticipation of a rate cut but losses were curbed when the decision to hold was released. For those with a longer term AUD requirement do be warned however as the central has indicated that cuts could be on the horizon in the coming months. I personally feel we will see an interest rate cut and yes you could argue that this has been priced into the market but should a cut be seen I would still expect the AUD to lose value should this outcome occur. In the short term for anyone buying AUD we have seen a little spike, and following the GDP data GBP/AUD is now at 6 week high, potentially a good buy opportunity? I would say yes. I feel until we see an interest rate cut the AUD is still likely to remain strong, yes growth forecast for China have bee cut to their lowest in a decade, however the demand from China for raw materials in Australia is still likely to remain strong and hence keep the value of the AUD strong.
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