Australia is the first country to raise interest rates. The move, that surprised the markets, sent shock waves to other currencies as well. And the day just began. Let’s see what’s expecting us in the rest of the day.
Rate hike in Australia
Glenn Stevens confirmed the rumor – his RBA raised the Australian Cash Rate to 3.25%. Despite the rumors yesterday, this move is still very surprising. Most economists didn’t see it coming. In the RBA Rate Statement, Stevens said that the risk has passed, and that growth is strong. He turned the focus to inflation worries. Australia had the highest interest rate in the West, and is now the first country to raise rates since the financial crisis began last year.
AUD/USD went all the way back up 0.8870, a little higher than last week’s peak, and now stalled there. Before this dramatic event, Australian Trade Balance disappointed with a worse than expected deficit of 1.52 billion, much more than 0.89 billion that was estimated.
This rate hike by Stevens sent also other currencies higher against the dollar. EUR/USD and NZD/USD made nice gains, while USD/JPY and USD/CHF went down. The response of the British Pound was quite weak.
For more on the Aussie, check out the AUD/USD Outlook.
Other economic events
In Switzerland, CPI is expected to rise by 0.1%. No inflation fears for the Swiss.
In Britain, Halifax HPI is scheduled for today. It’s expected to rise by 0.6% after a neat 0.8% rise last time. Later in Britain, Manufacturing Production is expected to continue rising as well, this time by 0.4%. Will it help the Pound? GBP/USD is currently struggling below 1.60.
In the afternoon, the NIESR GDP estimate will be published in Britain. After many months of contraction, this unofficial estimate showed growth last month. Will this growth estimate continue in the last month of Q3? For more on the Pound, read the GBP/USD Outlook.
In Canada, Building Permits took a dive last month after a strike in Toronto took its toll. Last month’s 11.4% plunge is expected to be followed by a 4.5% this time. Later in Canada, Ivey PMI is expected to continue the positive trend and rise from 55.7 to 56.6 points.
For more on the loonie, read the Canadian Dollar Outlook.
That’s it for today. Happy forex trading!
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