Forex Trading - Central Banks

Australian Dollar is higher on RBA outlook

Sun, 10 Feb 2008 19:12:00 -0800

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The Australian Dollar is higher after the Reserve Bank of Australia (RBA) said it was likely to increase interest rates in order to curb rising inflation. It was the second consecutive rise in forex trading as the RBA increased its inflation forecast in its quarterly statement, prompting investors to speculate on a futher interest rate rise to add to last weeks 25 basis point increase to a 12-year high of 7 percent. ''This hawkish statement is certainly Aussie positive as it gives some forward guidance that unless there's a further deterioration in the global outlook, higher interest rates will be required,'' said Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney. ''The Australian dollar is a high- yield story for the rest of the year at least.'' The higher Australian Dollar has been boosted over the past couple of weeks through interest rate rises by the RBA and interest rate cuts by the US Federal Reserve. The high Australian Dollar will be expected to rise further if its interest rate differential continues to widen against the US Dollar.

In the fourth quarter of 2007, the headline annual inflation rate stood at 3 percent while underlying core inflation rates were hovering at 3.5 percent. The Reserve Bank of Australia considers an inflation rate between 2 to 3 percent as a stable level.

In forex trading, the Australian Dollar is higher at 90.19 US cents, higher from a previous trade of 89.75 US cents.

Australian Dollar stronger on rate hike

Tue, 05 Feb 2008 03:56:04 -0800

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The strong Australian Dollar continued to gain against the US Dollar after the Reserve Bank of Australia (RBA) increased its borrowing rate to a 12-year high of 7 percent. The 25 basis point rise was the sixth interest rate hike in two years. The Australian Dollar fell for a brief period after the RBA announced the cut as forex traders locked in their gains before the rally. This morning, the high Australian Dollar continued its early rally, almost brushing 91 US cents, close to a three month high. Despite the rate hike, Richard Franulovich, A New York-based senior currency strategist with Westpac doubted the RBA's ability to control inflation. ''A 25 basis point hike is not enough to address inflation,'' he said. ''Could they come out and say they're done and they're comfortable with the policy? No. They've lost control of inflation.''

In forex trading, the Australian Dollar was higher against the US Dollar, trading at 90.70 US cents compared with 90.65 US cents before the rate hike was announced. The strong Australian Dollar is expected to rise further on speculation that inflation cannot be controlled, fueling a further possibility of another rate hike in the near future.

US Dollar at a 2-Month low on rate cut

Wed, 30 Jan 2008 17:50:04 -0800

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The US Dollar is at a 2-month low against the major currencies after the US Federal Reserve cut interest rates by half a percentage point. The rate cut comes just 8 days after the US Federal Reserve unexpectedly cut rates by three quarters of a percentage point in order to support its deteriorating economy. ''The language in the Fed's statement was fairly strong, suggesting the Fed is still worried with the possibility of further deterioration in the U.S. economy,'' said Mark Meadows, analyst at Tempus Consulting in Washington, D.C. Dealers in the New York Board of Trade's US Dollar index reacted by pulling the US Dollar at a 2-month low. Analysts are worried about the inflationary impact of the Fed's aggresive rate cut. Despite that, they have said that Federal Reserve's main focus is to keep the US economy out of a recession.

In forex trading, the US Dollar hit a 2-month low against a basket of currencies. It hit resistance against the Euro, falling by 0.8 percent to trade at $1.4906. The Pound Sterling traded higher by more than a cent and last traded up 0.1 percent at 1.9914. The dollar also fell 0.6 percent against the Japanese Yen to trade at 106.40 Yen and hit a record low of 1.0824 Swiss Francs. It also fell against the Australian Dollar, trading at 89.95 US cents compared with yesterday's trade of 89.77 US cents.

US Dollar falls amidst impending recession

Sat, 26 Jan 2008 20:39:17 -0800

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The US Dollar has weakened against the Euro and the British Pound after the Fed's emergency rate cut failed to convince investors that the world's largest economy will avoid a recession. The US Federal Reserve unexpectedly cut key interest rates by three quarters of a percentage point on the 22nd of January, reacting to a global decline in stock markets. The rate cut was largest reduction in 18 years. ''The Fed easing or not, the economy is in deep trouble,'' said Lane Newman, director of forex trading in New York at ING Financial Markets LLC. ''The negative trend for the dollar still remains.'' Despite the cut, Wall Street plunged at the opening with the Dow Jones industrial average falling by 465 points before stocks rebounded. The Dow ended the day off 128.11 points at 11,971.19.

In forex trading, the US Dollar faced resistance against the Euro and the British Pound, falling by 0.4 percent to $1.4681 against the Euro from $1.4621 on the 18th of January. It also faced resistance against the British Pound, falling by 1.4 percent to $1.9828 per Pound from $1.9554. The US Dollar has declined by 1.5 percent against the Euro since it cut its interest rate. The Japanese Yen rose against the major currencies yesterday after a decline in the Standard and Poor's 500 Index reduced the incidence of carry trading.

Reserve Bank of Australia (RBA) raises inflation forecasts

Sun, 12 Aug 2007 23:49:07 -0700

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The Reserve Bank of Australia (RBA) has raised its inflation forecasts to its highest range while stating that economic growth will increase. This has come only a week after the RBA increased its interest rates to 6.5 percent, an eleven year high. Core Inflation will speed up to three percent by the end of this year, the RBA said in a quarterly policy statement released today. ''This is tough talking on the inflation front,'' said Michael Blythe, chief economist at Commonwealth Bank of Australia, the nation's second-largest lender by assets. ''Interest rates will go up in the early part of next year.'' The Australian economy is currently in its 16th year of economic growth and still going strong with a rise in jobs with rising incomes fueling consumption. The jobless rate is 4.3 percent, close to the lowest in 33 years, and business and household confidence are near record highs. The jobless rate is 4.3 percent, close to the lowest in 33 years, and business and household confidence are hitting near record highs. Global economic growth has ''remained strong,'' Australia's central bank said. ''It will remain important to keep a close watch on both domestic inflation risks and any further developments in international financial markets.''

In the foreign exchange, the Australian Dollar rose the most out of any currency on expectations of another interest rate rise by the end of this year. Against the U.S. Dollar, the Australian Dollar advanced to 84.87 U.S. cents in Sydney this afternoon compared to 84.68 U.S. cents before the statement. The currency traded at 100.16 Japanese Yen compared to last weeks 99.96 Yen. Australia's dollar hit an 18-year high of 88.71 cents on July 25 after the CPI rose 2.1 percent in the quarter from a year earlier, more than the central bank's May forecast of 1.75 percent.

Reserve Bank of Australia (RBA) raises interest rates to 6.5 percent

Tue, 07 Aug 2007 22:25:10 -0700

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The Reserve Bank of Australia has increased its interest rate to 6.5 percent, the highest level in 10 years. The quarter of a percent rate rise was announced this morning. "For some months, the Board has recognised that stronger economic conditions were likely to put upward pressure on inflation, notwithstanding some dampening influence from the higher exchange rate," said RBA governor Glenn Stevens in a prepared statement. "However, the high CPI outcome for the June quarter indicated a less favourable near-term outlook, with the implication that any further increases in inflation would take place from a higher starting point than previously envisaged. Based on these considerations, the Board judged that a somewhat more restrictive monetary policy setting was required in order to keep inflation consistent with the target in the medium term," he said.

In the foreign exchange, the Australian Dollar was worth 85.66 U.S. cents and 101.72 Japanese Yen, down from yesterday's close of 85.50 U.S. cents. Su-lin Ong, a senior economist from Rbc said the rate rise did not have a lasting impact on the currency because the rate rise was already largely factored into the market.

The British Pound Falls after a quarter point rate hike by the Bank of England

Sat, 12 May 2007 04:20:44 -0700

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The British Pound dropped against the U.S. Dollar after the Bank of England fulfilled expectations by increasing interest rates by a quarter of a percentage point. ''The market will be reluctant to draw too much from the statement and the hike, both of which were in line with expectations,'' said Daragh Maher, a currency strategist at Calyon in London.

Despite falling, the British Pounds decline is still limited after a report from the National Institute for Economic and Social Research revealed that the U.K economy had managed to expand by 0.7 percent.

In the foreign exchange against the U.S. Dollar, the British Pound was worth $1.9839 compared to $1.9922 earlier in the week.

Reserve Bank of Australia expected to keep interest rates on hold

Mon, 02 Oct 2006 18:25:48 -0700

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The monthly meeting of the Board of the Reserve Bank are expected to keep interest rates on hold for this month. This is the first meeting with the new Governor, Glenn Stevens who took over Ian Macfarlane. Mark Rodrigues says that the Reserve bank is unlikely to raise interest rates until the quarterly inflation figures are released at the end of this month.

"It seems unlikely for October because it won't cost the Reserve Bank very much to wait one month for the next CPI report but it certainly remains on the cards for the next interest rate meeting in November," he said. Mr Rodriguez has also said that there is a high chance of interest rates rising again this year. "The balance of risk to the economic outlook are still clearly tilted in favour of higher inflation rather than lower growth," he said.

The factors that the Reserve Bank looks at when trying to determine interest rates are global growth, inflationary expectations and credit growth, which are all high at the moment. The RBA raised interest rates during the months of May and August, due to concern on rising inflation and strong global demand. The interest rate decision will be announced tomorrow morning.

Interest Rate gap in Australia lures investors

Thu, 24 Aug 2006 01:31:01 -0700

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The Aussie Dollar may increase on the speculation that overseas investors will find the higher yield on the nation's debt more appealing, if The Reserve Bank of Australia (RBA) will raise interest rates for the third time this year.

``There is still a lot of demand around for the Australian dollar,'' said Nigel Russell, director of foreign exchange institutional sales at SG Australia Ltd. in Sydney.

``There's still more of a reason to buy the currency on an interest rate differential.''

Governor Ian Macfarlane from the Reserve Bank of Australia (RBA) said that it's likely that the central bank will increase interest rates. Earlier this month, the central bank increased the overnight cash rate to 6 percent to a 5 1/2 year high.

In foreign exchange trading today, the Australian Dollar traded 76.27 U.S cents at 8:09am from 76.30 U.S cents last night from Asian trading. The Australian Dollar, in comparison traded at 75.94 U.S cents at the beginning of this week.

Calls for the Economy to be held down to avoid 70's style inflation

Tue, 15 Aug 2006 03:00:38 -0700

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Odds make it even more unlikely that the Reserve Bank of Australia(RBA) will increase interest rates for the third time this year, amid calls to grab control of the Australian economy to prevent similar inflation surge to that of the 1970's.

In the 1970's, wages rose 30 percent with inflation also increasing to 18 percent. This lasted for over 20 years.

The Treasury secretary, Ken Henry showed his change in focus from avoiding recession to stopping the Australian economy from moving too fast.

"The economy is as close to fully employed as I've ever experienced in my professional life," Henry said in an Australian Industry Group conference which was held in the capital.

In trade, prices for non rural commodity exports increase by 84 percent, which has pumped extra income.

Henry has said that this boom will increase consumption, but not output because the Australian economy has been running somewhere close to full capacity.

"That means that other sectors must expand at a slower rate - some may even have to contract," he said. If they didn't, the economy would overheat and the result "would not be pretty".

Ken Henry did not mention whether or not another increase in interest rates would be necessary.

Condition of the U.S Dollar differs as Federal Reserve Decides to pause interest rates

Tue, 08 Aug 2006 20:01:54 -0700

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The U.S Dollar showed mixed trading while against the other major currencies on Tuesday in New York as the U.S Federal Reserve announced the decision to put interest rates on hold at 5.25 percent.

This hold on interest rates is the first time in 2 years.

The U.S Dollar showed little action against the Japanese Yen throughout the day. It advanced to about 115.25 during the morning. The Dollar then decreased to 114.57 Yen but then regained to 115.01 Yen as of 3:40pm.

The U.S Dollar also reversed its gains against the Euro. After German trade balance and industrial production data was released, the U.S Dollar slightly weakened. After 3:40pm, the Euro was worth 1.2843 U.S Dollars.

The greenback had a poor showing trading with the Canadian currency. However, after the Canadian building permit data was released, the U.S Dollar managed to strengthen against the Canadian currency.
After 3:40pm, the U.S dollar was worth 1.1217 Canadian Dollars compared with 1.1183 previously

Reserve Bank of Australia(RBA) Raises Inflation Forecasts

Fri, 04 Aug 2006 05:06:14 -0700

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The Reserve Bank of Australia(RBA) has increased its inflation and economic growth forecast, which has added to speculation of the possibility that the Reserve Bank of Australia will increase borrowing costs for the third time this year.

The RBA released a quarterly statement on monetary policy today, stating the the core inflation rate will be 3 percent over the next two years. It exceeds the previous forecast of 2.75 percent.

The Reserve Bank of Australia raised interest rates close to a six year high of 6 percent this week, due to factors like higher consumer spending, increased wages and record commodity prices.

'It looks like the bank intends to increase interest rates again,' said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney.

'The inflation forecast is at the top of the bank's range, and the bank is suggesting the domestic economy is accelerating.'

The central bank also said that Australia's A$878 billion economy will expand to 3.5 percent over the next yaer or so, which was higher than expected.

Australian Dollar stronger as interest rates are increased

Tue, 01 Aug 2006 19:46:31 -0700

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The Australian dollar is stronger after the Reserve Bank of Australia (RBA)increased interest rates to a 5 year high of 6 percent.

The Australian Dollar rose to 76.67US cents on 10:22am, Sydney time from 76.50US cents right before the decision to increase the interest rate was made. Asian trading last night was at 76.08 cents.

Reports last week state that the annual inflation rate increased to 4 percent during the second quarter. The aim of the Reserve Bank of Australia(RBA) is to keep the inflation rate between 2 and 3 percent.

In a statement made by the Reserve Bank of Australia(RBA), says that the Australian economy is growing as the world economy continues to grow in an above average rate.

Commodity prices have also helped the Australian dollar grow in the areas of national income and spending.

A government report has also showed that retail sales increased twice as much compared to economist's forecasts in June. This report will increase the speculation that the Reserve Bank of Australia (RBA) will increase interest rates again.

``It feels like the Australian dollar will just continue to grind higher,'' said James Wallace, manager of Camelotfund Ltd., a currency hedge fund based in Sydney. ``The retail sales were very strong. The Reserve Bank has got to go again, it's just a matter of when.''

RBA Sells a net A$620 million In Forex Market

Thu, 20 Jul 2006 04:03:17 -0700

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In the foreign exchange market, the Reserve Bank of Australia has sold a net of A$620 million in the spot forex market in June, according the figures by the central bank.

The RBA monthly bulletin gives an indication on foreign exchange transactions that the Australian Dollar has taken accredited forex dealers here in Australia or in international banks.

During June, the Australian Central Bank bought A$702 million from the government.

At that month, the Australian dollar had fallen from US$0.7520 to US$0.7435.

Together with RBA spot market transactions and government with business, the central bank has bought A$82 million during June.

Reserve Bank of Australia (RBA) leaves rates unchanged

Tue, 04 Jul 2006 19:22:29 -0700

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The Reserve bank of Australia has decided to keep interest rates unchanged this month at 5.50 percent.

During May, the Reserve Bank of Australia (RBA) increased rates to 5.75 percent which took borrowing costs to a five year high. The RBA regulates the interest rates to keep inflation underneath the 3 percent benchmark.

Analysts warn that interest rates could rise next month because of petrol and grovery prices pushing up inflation. They are also asking if there is a possibility of any more interest rate hikes in the course of 2006.