RBA keep Rates on hold
During the night we saw the Reserve Bank of Australia (RBA) interest rate decision. Rates were kept on hold at 1.5%, this was anticipated so id did not have a significant impact on Australian dollar value. The market moves on rumor as well as fact, volatility is created when things don’t go according to the general consensus.
Interest Rate Forecast
I would expect interest rates to remain at these levels for the foreseeable future due to the situation with the Australian housing market and Chinese growth. Housing prices in Melbourne and Sydney are well above the national average due to the higher wages being offered in the cities. This is all very well, but when you have foreign investors buying the properties unconcerned with the inflated process we are starting to see a housing bubble start to emerge. A very similar situation to London, a bubble that can not afford to burst.
There is also Australia’s heavy dependence on the Chinese to purchase their raw materials. Iron ore is Australia’s primary export and as such it’s price can influence Australian Dollar value. Despite Chinese growth still being healthy it is by no means as strong as previous years which is worrying considering Australian’s heavy reliance on the Chinese. It is wise to keep an eye on both Chinese growth data and Iron ore prices if you are considering trading Aussie.
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