Australia reduces interest rate to 4.25%. Retail Sales rise. Aussie gains in currency trading. | CountingPips Forex Blog

December 2, 2008 - Forex Economic News

Australia reduces interest rate to 4.25%. Retail Sales rise. Aussie gains in currency trading.

The Reserve Bank of Australia lowered its interest rate by more than expected overnight, surpassing market predictions and marking the third month in a row the RBA has slashed the rate by at least 75 basis points. The RBA announced that it had reduced its official cash lending rate by a full percentage point today from 5.25 percent to 4.25 percent. The rate cut surpassed market forecasts expecting an interest rate reduction of only three quarters of a AUD gains in Currency Trading percentage point or 75 basis points and follows a reduction of 75 basis points on November 5th. The RBA has now slashed its interest rate by 3 percentage points since September and today's full point reduction brings the interest rate to its lowest point in over six years.

Glenn Stevens, RBA Governor of Monetary Policy, commented on the economy in the report, "The Australian economy has been more resilient than other advanced economies, but recent data nonetheless indicate that a significant moderation in demand and activity has been occurring. With confidence affected by the financial turbulence and a decline in the terms of trade now under way, more cautious behaviour by both households and businesses is likely to see private demand remain subdued in the near term. With that outlook, and with capacity pressures now easing, it is likely that inflation in Australia will soon start to fall. Global disinflationary forces will assist in this regard, though the depreciation of the exchange rate means that the decline of inflation to the target could take longer than would otherwise have been the case."

Today was a busy news day out of Australia as retail sales numbers and trade balance data were also released(below) while tomorrow the Australian third quarter GDP data is released. The third quarter GDP data is expected to come in at a 0.2 percent increase after rising by 0.3 percent in the second quarter.

Australian retail sales increase in May, beat expectations.

Australian retail sales rose in October surpassing expectations according to a report released by the Australian Bureau of Statistics today. October seasonally adjusted retail sales increased by 0.7 percent after retail sales registered a revised 1.0 percent decline in September. The retail sales data was better than the 0.2 percent decrease that economic forecasts were expecting. On an annual basis, the retail sales data was 2.2 percent above the October 2007 level and follows September's annual gain of 1.7 percent.

Leading contributors to the increased retail sales data were other retail sales which includes recreational goods and jewelry increased by 7.6 percent for the month. Food retailing also contributed positively to the data by gaining 0.4 percent. The negative contributors for the month were department stores with a decline of -1.3 percent and clothing retailing with a -0.8 percent decline.

Australia trade deficit shrinks in 3rd Quarter.

The Australian trade deficit decreased by 31 percent in the third quarter from the second quarter according to data also released by the Australian Bureau of Statistics. Australia’s trade balance for the July through September quarter was a seasonally adjusted -A$9.736 billion following a revised -A$14.043 billion in the second quarter. Helping to decrease the deficit was a surplus of goods and services of A$1,432 million after a deficit in the second quarter of A$1,264 million.

Australian dollar gaining in Currency Trading today.

The Australian dollar has been gaining ground today in currency trading against most of the major currencies despite the more than expected rate announcement. The Australian dollar has advanced verses the U.S. dollar to 0.6444 AUD per USD in the US trading session just before noon ET from today's opening exchange rate at approximately 0.6408.

The Aussie dollar has increased verses the Japanese yen to 60.27 from today's open exchange rate of approximately 59.92 yen per aussie. Against the Canadian dollar, the aussie has advanced to trading at 0.8001 from 0.7968 earlier today while against the New Zealand kiwi, the aussie has gained from 1.2084 kiwi per aussie at today's open to trading at 1.2122 in the U.S. before noon.

The euro has advanced verse the aussie slightly today to trading at 1.9782 aussie per euro after opening today at approximately 1.9738.

AUD/USD Chart - The Australian dollar increasing vs. the US dollar in forex trading today(15 Min. Chart).

Today's Forex Chart

tags: australia, interest rate, aud, retail sales, trade, aud currency trading

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