RBA to Cut Australian Interest Rates by 0.5%

The Australian Dollar exchange rate is the worst performer of the major foreign exchange crosses, down from 85.9 last week to 7925 late yesterday on a series of negatives, not least of which is crashing commodity prices. In addition, global recession in Australia’s big Asian markets can’t be too far behind, suggesting a second wave of expected fear. The domestic data suggests the slowdown already has a grip, with Australian mortgage lending at the slowest pace since 1986 and building approvals down for a second month. RBA Gov Stevens already said the economic expansion is decelerating, and the consensus outlook is for a interest rate cut by a big 50 bp at the Oct 7 policy meeting.

According to Bloomberg, Australian government bonds rose and the yield on the 10-year note fell 27 bp to 5.397%, the lowest since March 2006.

Pounds to Australian Dollars exchange rate currently 2.2500

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Barbara Rockefeller - Forex Trading Reports

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Australian Banks make Record profit whilst the rest of us suffer

Hi All,

another interesting article today in the The Australian about Australian Banks. It seams that whilst they have been crying poor and lifting interest rates above the Reserve Bank of Australia official cash rate and inflecting mortgage hell on the rest of us they have increased profitability to 1 Australian Dollar per every 2 Australian dollars earned.

The four pilliars of the Australian Banking system Commonwealth Bank, National Australia Bank, ANZ and Westpac all lifted their mortgage rates by more than the Reserve Bank.

This just isn't fair - the banks are clearly just raising profit margins and blaming the credit crunch. Has anyone noticed an increase on the interest paid on savings accounts - i dont think so.

Bye for now

IMS Foreign Exchange

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Sydney Rent Prices to Soar as Australian Dollar tumbles

Hi All,

found an interesting article today in the Australian News about rent prices in Sydney that may interest those expats moving back to Australia or those of you migrating to Australia

Landlords warned on rent hikes

The story highlights the chronic shortage of Australian Property at the moment and whilst Sydney is experiencing falling house prices, rental yields are going through the roof due to lack of investors in the buy to let market, low affordability of Australian homes for first home buyers, and the credit crunch and higher interest rates taking hold of those coming off fixed term mortgages faced with the real possibility of repossession of the family home.

The Sydeny rental market was like this after the 2000 Sydney Olympics but that is when people could borrow money freely and what resulted was a property boom of epic portions,

Do we expect the same to happy in 2008 - i don't think so - finance is only available for the cash rich.

Read the story and please leave comments on the blog to get a bit of a chat going for us Australian Expats living in London

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Australian Dollar exchange rate falling against both the US dollar and Pound

Hi all

The Australian Dollar is coming under further selling Wall Street tumbles after the Lehman Brothers news yesterday. The Australian Dollar to US Dollar exchange rate was trading below 0.8000 at 0.7850 which is music to the ears of Australian Exporters but will only push up prices further and help fuel inflation which the Reserve Bank and Australian Government are very concerned with.

Australian Prime Minister Kevin Rudd tried to boost confidence yesterday saying that the govt is in talks with the RBA regarding the Wall St crisis. Adds that the global crisis has a "long way to run yet." But the words where not heard by foreign exchange traders who still continue to sell the dollar.

Personally i can see the Australian Dollar exchange rate falling against both the US dollar and Pound to the 0.7350 and 2.3500 level in a very quick time as may FX traders would be sitting on large profits or get out of old losing positions.

Be very cautious with the Australian dollar - it has been know to bite back as i have found out personally many times

Bye for Now

IMS Foreign Exchange

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Pounds to Australian Dollar Exchange Rate tumbles

Hi All

Last night the Australian Reserve Bank realease it minutes of its last meeting - in short they have stated that the central bank had to cut interest rates this month to avoid the danger of a sharper economic slowdown than necessary, though policy could still need to be restrictive for some time to bring inflation down from 17-year highs.

The news wasnt taken that we by foreign exchange traders and the Australian dollar was dealt a fast swift blow and the Pounds to Australian Dollar exchange rate is now trading 2.2750, great news if you are migrating to Australia or live in the UK with an Australian mortgage like me.

Dont get to excited though the comments where meant to suggest that there will be now need for future rate cuts, although I theing the Australian Interest rate outlook is interest rates back in the 6% band as the Australian Housing market is still suffering and is also one of the countries biggest employers and the australian government needs it firing to keep employment down and GDP up.

Bye for now

IMS Foreign Exchange -

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Currency Traders Sell Australian Dollars

The Australian dollar has closed below 0.8000 against the US Dollar for the first time in more than a year as a surprise drop in the jobless rate failed to give the currency a sustained boost.
A bigger than expected New Zealand interest rate cut drained momentum from the Australian dollar as foreign Exchange traders dumped high-yielding currencies.

The Australian dollar was trading at $US0.7954/57, down from yesterday's close of $US0.8075/79, marking the third successive weaker finish. This was the unit's lowest closing level since August 17, 2007 when the Australian dollar finished at $US0.7741/47.

During the day, the local currency traded between a late morning low of $US0.7945 and an early afternoon high of $US0.8020. The Australian dollar finished below 86 Japanese yen for the first time since July 2006.

The domestic currency struggled after the Reserve Bank of New Zealand cut interest rates this morning by a bigger than expected 50 basis points, taking the cash rate to 7.5 per cent.

"The Aussie dollar did open up this morning under pressure, tracking the Kiwi dollar,'' Easy Forex currency dealer Anthony Botros said. "It's been a concept in the market that because they're neighbouring currencies they do tend to track each other.''

The Australian dollar rose above $US0.8000 in late morning trade from its daily low, after Australian Bureau of Statistics data showed the jobless rate in August falling by 0.2 percentage points to a five-month low of 4.1 per cent.

The seasonally adjusted data was better than market forecasts of a 4.4 per cent unemployment rate for last month, and helped the Australian dollar step above $US0.8000. Mr Botros said traders saw the noon rally as a chance to sell the Australian dollar.

"The (labour market) figures were relatively good but they don't show much of a correlation to recent commentary from the Reserve Bank regarding ... a slowing economy even though interest rate easing will be subdued,'' he said.

Reserve Bank of Australia governor Glenn Stevens told a parliamentary economics committee on Monday that he expected the jobless rate to rise above five per cent in the next 12 to 18 months as the economy slowed.

For the full story visit news.com.au

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Reserve Bank of Australia cut rates today by 25 bp to 7%

The Reserve Bank of Australia cut rates today by 25 bp to 7%, as expected but a bit earlier than some had forecast. RBA Gov Stevens said overall economic slowdown should help inflation fall back to the desired 2-3% level from 4.5% today. The WSJ reports the move is the first cut since Dec 2001 and starts the unwinding of the twelve rate hikes that started in May 2002. Australia reports Q2 GDP tomorrow, probably 0.4% q/q and 2.9% y/y.

Pounds to Australian Dollar exchange rates 2.1300

bye for now

IMS Foreign Exchange