The Aussie Has Rallied From A Five Month Low
The Aussie has rallied fronm a five month low indicating that is was most probably devalued too much due to some of the negative global factors which have been occurring. A case in point is what is going on in Greece. Threr is a possibility that Greece may be forced to leave the EU which will have an impact upon most of the industrialixed world.
“The Aussie looks to be taking a little breather here,” said Takuya Kawabata, a researcher at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency- margin company. “The parity level is likely to present major resistance for a while.” The Aussie will most prroblay not make parity for awhile. There are a numberof factors that will affect this. The mining industry is continuing to expand but retail sector has become very sluggish. The Central bank will reducde interest rates by one half of one point and will probably cut it again next month.This will most probably expand the exonomy. Working against this move is the fact that the Prime Minister will cut spending next year to reduce the deficit. Although this may be a good move it may slow the economy as it did in the UK. The mitigating factor is that thed Central bank has room to cut rates unlike their counterparts int he US and the UK.
The next year should be challenging but it seems that the right moves are being taken. Interest rates will drop and the deficit will be dealt with. The Greek situation is out of our control and it is hoped that it will be resolved. Bond yeilds dropped to to a two month low and it is hopeful that the cash rate drop will revive the below average growth and stop the rising mortgage costs. It is hoped it will improve consumer condifence.
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