Last night Australia reported .2% GDP growth, slightly less than the .4% predicted by economists. This is the third straight month that their economy has grown, due in part to government spending on public works projects. Also, the central bank announced that “monetary policy is now back in the normal range”, signaling that the RBA will most probably not be raising rates anytime soon.
As a result, the Aussie is down this morning, .7% vs. USD, .67% vs. CAD, and 1.4% vs. GBP.
And while this makes perfect sense, I must point out that right now the Australian economy might be the “best run ship” out there right now. They are not pursuing destructive monetary or fiscal policy (unlike the US), are completely comfortable with modest growth (unlike China), and haven’t really participated in the boom and bust cycles that the rest of the world has experienced.
Part of the issue right now is the Aussie’s place in the risk-aversion trade. With the problems coming out of Europe and the uncertainty here in the US, I’m going to be cautious getting into carry trades.
But if the currency market were purely a beauty contest, the Aussie dollar would win hands down!
To learn more about currency trading, please check out our currency trading courses!
To get a free, real-time practice account to follow the Aussie’s progress, click here!
none