News from Australia was dominant at the wake of Tuesday morning. Interest rate was cut as expected by 1%. The next big thing today is the Pending Home Sales figure in the US. What else is there today?
Rate Cut in Australia
Australia’s RBA slashed the Cash Rate to 3.25%, down from 4.25%. This ends a week in which interest rate in Australia was higher than in New Zealand.
In the accompanying RBA Rate Statement, the bank mentioned the financial turmoil since Lehman’s collapse, that other economies have contracted sharply and that even the Chinese economy is slowing down. Australia is dependant on China.
Being a strong economy, Australia “blames” the recession for coming from outside: “The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad” said the bank.
The rate cut was widely expected, and AUD/USD made nice gains following the announcement. AUD/USD now trades at 0.6375. Trade Balance in Australia was lower than expected, at 0.59B nearly half of the early expectations.
Other Economic Indicators Today
Japanese Average Cash Earnings dropped by 1.4%. This didn’t affect USD/JPY which trades at 89.71. This currency pair hardly moved.
In Europe, German Retail Sales were disappointing, showing a drop of 0.2%, rather than an expected rise of 0.5%. PPI is due later in Europe, and it’s expected to fall by 1.1%. EUR/USD now stands at 1.2851.
In Switzerland, Trade Balance was bad – a surplus of only 0.22B, and not 1.74B as expected. USD/CHF is now at 1.1617, mostly unchanged.
In Britain, Construction PMI is expected to be at a record low of 28.8 points. Britain’s real estate has suffered badly. GBP/USD is now at 1.418.
And, at 15:00 GMT, Pending Home Sales is expected to be left unchanged, after falling by 4% last month. Also in the US, home sales have pushed the economy upwards, and is now weighing on it badly.
Also in the US: Total Vehicle Sales from the Auto industry that is fighting to survive.
Happy Forex Trading!
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