Aug. 19 (Bloomberg) -- The Australian dollar traded within 2 U.S. cents of a one-week high on speculation China will increase purchases of assets in commodity-rich nations as it diversifies reserves away from the U.S. currency.The following report is also another big déjà-vu: it's almost word for word what the Fed was saying before the major real estate collapse of 2007 and them cutting interest rates to almost 0% within a few months.
Aug. 17 (Bloomberg) -- Australian central bank policy makers kept borrowing costs unchanged two weeks ago for a third month, judging the nation’s economic expansion won’t stoke inflation and amid doubts about the global recovery.Full disclosure: I am short AUD against EUR and USD
“Markets had settled somewhat, but there was still more uncertainty over the global outlook than there had been earlier in the year,” the central bank said in minutes of its Aug. 3 meeting released in Sydney today.
Investors don’t expect Governor Glenn Stevens to begin resuming interest-rate increases until next year, after he boosted the benchmark rate six times between October and May to 4.5 percent, bringing borrowing costs to a level policy makers describe as “average.” The bank also said there are signs “a greater degree of caution” among households may help cool inflationary pressures caused by the nation’s mining boom.
“The major news in the domestic economy had been that underlying inflation had continued to fall, in line with the bank’s expectations, and was now below 3 percent,” the bank said today.
Policy makers also said they “felt comfortable” with keeping borrowing costs unchanged in June and last month because of “an environment where there was a significant degree of market volatility.”
The bank also said in today’s minutes that the outlook for stronger growth in Australia’s economy “has not changed.”
Core inflation will average 2.75 percent until the end of next year before accelerating to the top of the central bank’s 2 percent to 3 percent target range by mid-2012, the Reserve Bank of Australia said Aug. 6. It also reiterated its prediction from three months earlier that annual economic growth will quicken from 3.75 percent late this year to 4 percent at the end of 2012.
“The board therefore judged the existing level of the cash rate as still appropriate, and decided to leave it unchanged for the time being, pending further information,” today’s minutes said.