Interest rates have been kept on hold again by the Reserve Bank of Australia this month as confirmed in the minutes published this morning. With rising house prices and strong retail sales there was little need for the RBA to move interest rates. The RBA has said that it is prepared to cut interest rates if required but for the moment the economy is doing well so why change a winning formula.
The news in Cyprus is causing shock waves across the fx markets particularly for the Euro with GBPEUR the highest for almost 2 months. Typically uncertainty in Europe often causes a sell off for the Australian Dollar as investors shy away from the risk element but with the RBA’s minutes this morning has seen a lack of movement on exchange rates today.
Manufacturing and tourism are being negatively affected by the high Aussie Dollar so as always the question is how long can this strength last? With the economy on paper at least remaining strong especially in the mining industry this strength could last for quite some time. In the short term however the UK announces its Budget tomorrow so all eyes will be on whether Chancellor George Osborne can put in plans for growth. If he can we could see some good short term buying opportunities for GBPAUD exchange rates.
To be kept updated with announcements in the Budget tomorrow feel free to email me directly Tom Holian [email protected]