Glenn Stevens, President of the Reserve Bank of Australia, issued a warning that the ongoing strife in Europe will likely impact the global economy.
“The [European] episode is not yet over, and the issues will continue to need careful handling by all concerned and close monitoring by the rest of us,” said Mr Stevens. “It cannot be denied that the potential for further financial turmoil exists.”
Stevens noted that due to its economic ties with China as a major resource supplier, is well-positioned to avoid the worst of the problems looming on the horizon. In fact, Australia was the only major developed nation to avoid entering recession.
Source: BBC News
In what could be a harbinger of things to come in Europe, Finland officially fell back into recession during the first quarter of the year. During the January to March time frame, Finland’s economy contracted by a seasonally-adjusted 0.4 percent after losing 0.2 percent in the final quarter of 2009.
Source: BBC News
THE Reserve Bank will almost certainly lift the official interest rate by 25 points next Tuesday.
Both the governor Glenn Stevens and his deputy Ric Battellino have ‘told us so.’
Not, obviously, in specific words. Indeed they haven’t even yet ‘told’ their fellow board members. The management’s recommendation will be finalised and sent to board members today.
Herald Sun
AUD/USD broke higher as expected. It’s superior fundamentals have continued to cause it to head higher, especially when directly compared to the weak fundamentals of the U.S. and its dollar.
See the comments from RBA Governor Stevens below:
Reserve Bank of Australia Governor Glenn Stevens struck a decidedly hawkish tone at a speech in Sydney, driving home the point that going forward the central bank is now actively trying to time a return to higher interest rates. Stevens said Australia is faring better through the global downturn than other developed economies, noting that “confidence has recovered ground” and boasting that “unemployment is rising slower than expected”. He went on to stress that central banks should not relax their commitment to keep inflation anchored through the recession, a clear hint that global tightening of monetary policy should now be on the table. That said, Stevens conceded that some stimulus needs to remain in place for now and conceded that the timing of unwinding expansionary policy presents a challenge. The market greeted the RBA chief’s comments, with the Australian Dollar surging 50 pips in a mere 30 minutes.
EUR/CHF continues its overall ascent, as expected. The SNB continues to hold the pair above 1.52 and its only a matter of time before we see the high 1.53’s. Keep in mind too, that through our broker, you do earn some interest on this on a daily basis too (on their standard mini accounts). Not all have this on this pair right now.
Sean Hyman
www.forextradingblog.com
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Trend trumps support/resistance! As you can see on the chart below, the trend’s direction is THE most important thing (green moving average line). The uptrend has prevailed through many black resistance lines before and it’s about to do it again, after a resting/consolidation phase.Click on the chart to enlarge it.
Aussie’s inflation is still high…it’s rates are the highest among the industrialized nations and the world needs its commodity exports. The global economy is recovering…China is buying up commodities to fuel its expansion…and Australia is the beneficiary of all of this.
Update on EUR/CHF: It continues to make “higher bottoms” as the Swiss National Bank, their central bank, continues to “sell francs vs. the euro. This continues to gradually push EUR/CHF higher.
Sean Hyman
www.forextradingblog.com
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Okay, I realize that this isn’t the only pair out there. However, it is likely the ideal candidate right now as it likely has much more upside potential than downside due to the constant intervening of the SNB - Swiss National Bank (Switzerland’s central bank).
Also, keep in mind, the trend is now upward recently…and no longer downward. Being that the EUR/CHF is one of the more widely watched/traded pairs by institutions (which produce such enormous volume for a “cross pair”), it won’t be long before their automated “trend following” programs kick in and aid the central bank’s efforts.
And…it appears that the SNB keeps going into the market and selling francs “sooner and sooner” all the time. See how it continues to “raise the floor” for the EUR/CHF pair. Click on the chart to enlarge it.
Sean Hyman
www.forextradingblog.com
P.S. - Want to learn more about fundamentals and technicals? Sign up for an inexpensive, only forex course today and we’ll show you how: http://www.mywealth.com/currency-trading.php
