Australian Dollar Exchange Rate

RBA raises inflation forecast

The Oz dollar has remained near 3-decade high this week following RBA's decision to up its inflation forecasts for 2012.

Peter Lavelle with specialist foreign exchange broker Pure FX - 10.05.2011.

Planning to sell Australian dollars into euros or US dollars? Then it couldn't be a better time.

Following the release of Reserve Bank of Australia's (RBA) latest inflation forecast the AUS has climbed against major rivals to hit near 3-decade highs. RBA said in its inflation report last week that it expects inflation to hit 3.0% in 2012 - the ceiling of its inflation band. This has lifted the Oz dollar because in response the bank is expected to up interest rates - and higher interest rates make Australian bonds more tempting to investors.

In addition the bank upped growth forecasts for 2011 in its report - stating that employment is expected to climb while investment from China and India should remain strong. This has also contributed to an upbeat mood around the Australian dollar.

Elsewhere in Australian economic data last week there were good signs. New home sales jumped 3.7% in March according to the Housing Industry Association (HiA) while building approvals soared 17% in the same month. This indicates conditions are good on the Aussie housing market. Performance of services data from Australia Industry Group (AiG) meanwhile jumped 5.0 points to 51.5 last month - indicating the Oz services sector is performing well also.

However on the negative data released last week showed that Aussie retail sales dropped -0.5% last month compared to forecasts of a +0.6% increase. This indicates that Australian consumers are feeling the pinch and spending less on the high street.

Like This Page?

ask a question

Subscribe to
Starting in Sydney News


I keep this private