The Australian dollar retraced its early gains against its major counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia kept its cash rate at a record low and cautioned that rising household debt levels and falling housing prices are posing uncertainty to economy. The aussie is poised to find support around the He started trading more than 7 years ago as a student. However, the bank was concerned about the terms of trade which continued to increase due to commodity prices. Policymakers observed that the outlook for household consumption remained uncertain, as growth in household income was low and debt levels were high.
The Reserve Bank of Australia announces its monetary policy decision - 2 October 2018
As an export-driven economy, Australia relies heavily on the conditions in the international markets. Therefore, any weakness in global trade has immediate impacts to the country. Last week, the trade conflict between the US and China escalated as the two countries imposed tariffs on each other. On a positive side, the US ironed out the remaining issued with Canada. This leaves a space for optimism in international trade as the US continues to negotiate with the EU and Japan.
China has said that it will halt all negotiations until after mid-terms. The bank expects the Australian economy to grow by 3 per cent in and This was as it had previously announced. It also remained optimistic about the Australian businesses with the non-mining sector expected to remain positive. Increased spending by the government will also help the country. However, the bank was concerned about the terms of trade which continued to increase due to commodity prices.
On inflation, the bank said the following:. The central forecast is for inflation to be higher in and than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in inflation in being a little lower than otherwise. Therefore, with the Fed continuing to increase rates, and with the Australian central bank remaining dovish, the AUD is likely to continue weakening. Crispus Nyaga Crispus Nyaga is a Nairobi-based trader and analyst.
On inflation, the bank said the following: The aussie pulled back from an early near 2-week high of 1. The pair was valued at 1. The aussie may test support around the 1. World stocks reverse course as Italy stress grips Europe again. Struggling at the triple-bottom, break or bounce? Italy has the cards. Risk Disclaimer - By using this web site you agree to its terms and conditions.
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