Australian dollar exchange rates have remained stable against most currencies following the release of the Reserve Bank of Australia minutes overnight. The minutes gave reasons as to why the Central Bank held interest rates at 3.5% as the report showed Australia grew at the fastest annual pace in the developed world in the first quarter of 2012, and government reports since RBA Governor Glenn Stevens’s latest policy decision have painted a mixed picture of the economy. Retail sales rose by more than twice the pace economists forecast and consumer confidence strengthened, but in contrast the unemployment rate increased and home-loan approvals fell. The minutes indicated they expected demand from China to remain strong (although some concerns were highlighted based on China’s falling GDP). However China is still posting strong figures compared to the rest of the developed world and this is likely to keep the Aussie strong against most majors. One aspect to highlight however is that the majority of traders are pricing in a rate cut at the RBA’s meeting in July and I personally feel this will curb any strong gains from the Aussie and we are likely to remain range bound between 1.51-1.53 in the short term.
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