19 July, 2017
It's not what they said but how they thought about it-rates at 1.5% are 2% away from their "normal" rate and so Australian dollar/U.S. dollar (AUD/USD) went up over 1.7%.
"While there is no way of assessing markets" direct expectations for growth in Australia the fact that a 0.25% rate hike is now factored in by August next year implies that markets are expecting a much stronger growth environment in Australia than our view.
Next on the agenda, markets are ringing the bell for more fear with a weaker United States dollars, lower rates, as the US Senate moves to the next agenda item, giving up on healthcare repeal and replace for now as two more Republican senators pull their support.
'Through 2018 we expect a 26% fall in the bulk commodity Index, including a 30% fall in the iron ore price.
Meanwhile the Euro found its advance this morning somewhat slowed by the release of the Eurozone's latest Consumer Price Index (CPI).
Normally when there are fears of an overvalued currency the central bank of the country in question is able to mitigate these effects through the use of interest rate changes, but with an already overheating property market the Reverse Bank of Australia (RBA) is concerned of making mortgages even easier to obtain and therefore fear another spike in the property market. This followed a surprising drop in the rate of Inflation within the UK.
At the time of the report, the Dollar Spot Index was up 0.10% at 95.252, with a 0.11% fall in the Euro supporting the Dollar Spot Index, while the Pound eased back from an intraday high $1.3117, flat on the day following a rebound going into the European open, sentiment towards a hawkish BoE providing the necessary support.
At the time of writing the EUR AUD exchange rate was trending around 1.4645 and the AUD EUR exchange rate was trending around 0.6826.
