Australian Property Prices continue to rise

Australian Dollar Rate Outlook

MELBOURNE'S property spree looks set to continue despite the looming threat of an interest rate rise.

Economists tip the Reserve Bank of Australia board will make history when it meets tomorrow by increasing official rates for the third month running. A 0.25 percentage point increase would bring the cash rate to 3.75 per cent, adding $45 a month to repayments on the average Australian mortgage of $300,000. There were more than 1000 auctions at the weekend, and about 2500 more are scheduled in the three remaining weeks before Christmas. The flood of stock trimmed Melbourne's auction clearance rate from its recent levels of 80 per cent to 78 per cent. Results were still solid despite heavy rain yesterday morning.

"Nothing's dampening the market at the moment," said Hocking Stuart Richmond director Chris Murphy. Yesterday afternoon Mr Murphy sold a Victorian terrace in Cubitt St, Richmond, for $756,000 - well above the advertised selling range of between $620,000 and $680,000. "We've sold nine out of 10 in Richmond this weekend," Mr Murphy said. A rise in interest rates would do little to cool the red-hot market, he said.

If the RBA decides on an increase to 3.75 per cent the official cash rate would still be lower than it has been for the past 20 years, excluding the global financial crisis. "We're coming off such a low base I don't think it will make a difference," Mr Murphy said. "If anyone's got any cash left after the GFC they're out and about bidding."

Real Estate Institute of Victoria's Robert Larocca said a lift in interest rates would be unlikely to shift the market until next year.

"If you're in the market at the moment you're committed and unlikely to change your course," he said.

Would-be homebuyers were aware that interest rates are on the way up and were already pricing in further rate increases. He said rates couldn't remain at emergency lows indefinitely.

To read more please visit www.news.com.au

Pounds to Australian Dollars = 1.8028
Euros To Australian Dollars = 1.6440
Australian Dollars to US Dollars = 0.9150
Australian Dollars to New Zealand Dollars = 1.2770

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Australian Dollar Outlook is bright as RBA looks to Hike Interest Rates

Australian Dollar Rate Outlook

THE Reserve Bank of Australia says further interest rate rises are "most likely appropriate", but the pace at which its adjustments will be made remains open. The central bank on November 3 raised the cash interest rate by 25 basis points higher to 3.5 per cent, its second rate rise in as many months.

The minutes of its board meeting that day, released today, said that if economic conditions continued to evolve as expected, a further gradual adjustment in the cash rate would most likely be appropriate over time. "But the pace of that adjustment remained an open question," the minutes said.

The RBA said it was "conscious of balancing risks" when considering adjusting interest rates, as it noted improved consumer and business confidence, better employment data and less spare capacity in the economy.

"On the one hand, business and consumer confidence could prove fragile, and economic activity at home and abroad might slow more than expected as the effects of stimulus measures faded," the minutes said.

"Also, the rising Australian Dollar exchange rate would constrain output and dampen inflationary pressure, and credit conditions for some borrowers remained quite difficult. "On the other hand, a lengthy period with interest rates at very low level carried its own risks, particularly once the threat of serious economic weakness had passed."

The bank had lowered interest rates to a 49-year low of three per cent earlier this year to deal with the threat of the global financial crisis. Rates stayed at that historically low level between April and October, when the bank raised rates by 0.25 per cent.

The minutes said that financial markets, while still volatile, were in better shape than they were six months ago, while debt and equity markets were providing easier, and less costly, access to funding. Better-than-expected labour force data for September, showing a drop in the unemployment rate and an up tick in total employment, was evidence that unemployment was more moderate than expected, the minutes said.

The local economy generated 40,600 new jobs in September, while the rate of unemployment dropped 0.1 per cent to 5.7 per cent in the month. Quarterly consumer price index data (CPI) released around that time also showed easing in the underlying rate of inflation.

"Given the the earlier period of lower demand growth and the moderation of labour costs, this trend decline in inflation was expected to continue over the coming year, with underlying and CPI inflation expected to be consistent with the target in 2010," the minutes said.

The central bank's stated aim is for inflation to be within a target of two to three per cent in the medium term. The minutes showed the bank took note of a raft of economic data pointing to improved economic conditions among Australia's trading partners.

"Asian economies were generally growing at quite solid rates, after having had sharp contractions in some cases. "The important consideration for the board was that, for the group of economies that comprise Australia's major trading partners, a broad range of forecasts were expecting growth to be around trend in 2010."

To read more please visit Wall Street Journal

Pounds to Australian Dollars = 1.8155
Euros To Australian Dollars = 1.6633
Australian Dollars to US Dollars = 0.9298
Australian Dollars to New Zealand Dollars = 1.2457

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Australian Dollar Exchange Rate shoots up to 15-month high vs US Dollar

Australian Dollar Rate Outlook

The Australian dollar exchange rate shot up almost three quarters of a cent to a 15-month high immediately after the release of better-than-expected employment figures. At 12.00pm AEDT, the dollar was trading at $US0.9362/66, up from yesterday's close of $US0.9294/99. During the local session, the unit traded between $US0.9298 and $US0.9371, its highest point since August 2008.

Nomura chief economist Stephen Roberts said the Australian dollars strength came after the release of unemployment data. "Those figures were stronger than expected," Mr Roberts said.
"We've had back to back monthly increases now in employment, which has broken a bit of that sore tooth for the time being where employment was always alternating between a good month and a negative month in terms of change."

Australia's unemployment rate was a seasonally adjusted 5.8 per cent in October, compared with unrevised 5.7 per cent in September, the Australian Bureau of Statistics said today.

Total employment rose by 24,500 to 10.832 million in October, seasonally adjusted. Michael of Sydney Full-time employment rose by 2,900 to 7.591 million in the month and part-time employment was up by 21,500 to 3.241 million. The participation rate in October was 65.2 per cent, compared with 65.2 per cent in September.

The median market forecast was for total employment to have declined by 10,000 in October, an unemployment rate of 5.8 per cent and a participation rate of 65.2 per cent. Mr Roberts said Australia needed employment growth because the labour force was growing faster. "So without relatively firm employment growth, the unemployment rate just slightly drifts up," he said.

The Australian dollars performance was strong but it still had some way to go to reach the highs of US$0.9500 in August and US$0.9850 in July last year. "Today it's done a fair bit of work," he said. "This number has given it a boost for the time being."

Mr Roberts forecast the Australian dollar would trade around the US0.9370-80 mark and drop back before the close of domestic trade.

To read more please visit http://www.news.com.au/business/story/0,27753,26340135-31037,00.html

Pounds to Australian Dollars = 1.7820
Euros To Australian Dollars = 1.6060
Australian Dollars to US Dollars = 0.9295
Australian Dollars to New Zealand Dollars = 1.2625

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Positive Australian housing data overnight saw investors Buy Australian dollars

Australian Dollar Rate Outlook

The euro exchange rate remained strong against the dollar in early New York trading Monday, hovering around the psychologically important $1.50 mark, after rising global stocks suggested markets would shake off last week's disappointing U.S. jobs data and continue to load up on risk.

Finance ministers and central bankers at this weekend's meeting of the Group of 20 industrialized and developing nations didn't mention currencies in their official communique, removing what had been a possible obstacle to placing bets on higher-yielding currencies.

If U.S. stocks follow the lead of Asian and European exchanges, the euro and other higher-yielding currencies are likely to extend their gains against the best US dollar rate. U.S. stocks are expected to open higher.

In early morning trading, the euro was at $1.4991 from $1.4844 late Friday, according to EBS via CQG. The dollar was at Y89.95 from Y89.96, while the euro was at Y134.80 from Y133.53. The U.K. pound was at $1.6773 from $1.6608

The Dollar Index, a trade-weighted basket of six currencies, was at 75.109 from 75.784 late Friday. The index was flirting with nearly 15-month lows.

Positive Australian housing data overnight sent investors into the Australian dollar, which lifted other higher-yielding currencies. The Australian dollar hit a two-week high, at $0.9299, on the data that showed Australian housing-finance approvals rose 5.1% on the month in September, more than the 3% rise expected.

The continuing positive pace of Australia's economic rebound added to the view that the Reserve Bank of Australia may deliver more increases to its key interest rates in coming months, boosting investor sentiment for the Australian currency.

Australia's economic turnaround contrasts with the disappointing U.S. jobs data reported Friday, which showed unemployment rose above 10%, its highest level in nearly three decades.

The weekend's G-20 meeting in Scotland also proved uneventful for financial markets. The group didn't mention currencies at all in its final communique. Some analysts had expected exchange rates would be discussed.

More direction appeared to come from comments by U.S. Treasury Secretary Timothy Geithner and U.K. Prime Minister Gordon Brown, who warned against ending financial-crisis support programs prematurely. In other words, there won't be any rush to tighten monetary policy, which should continue to weigh on the low-yielding US dollar exchange rate.

There are no key U.S. data Monday, which means the euro exchange rate and other higher-yielding currencies should track the direction of the stock market.

To read more please visit Wall Street Journal

Pounds to Australian Dollars = 1.8013
Euros To Australian Dollars = 1.6633
Australian Dollars to US Dollars = 0.9298
Australian Dollars to New Zealand Dollars = 1.2457

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Australian Dollar set to rise as RBA hike australian mortgage rates again

Australian Dollar Rate Outlook

A CHORUS of business leaders, led by Aussie chairman John Symond, has pleaded with the Reserve Bank of Australia to take baby steps in its push to raise interest rates away from "emergency levels".

The RBA stands to cripple thousands of homeowners if it raises official Australian interest rates too rapidly, in increments of more than 0.25 per cent, or by lifting rates above five per cent within a year, the home loan tsar told business leaders in Sydney yesterday, The Daily Telegraph reports. The Reserve is expected to lift its cash rate by 0.25 per cent, to 3.5 per cent, today with economists now ruling out the previously predicted "shock and awe" 0.5 per cent hike.

Relatively flat inflation figures, combined with further instability on global sharemarkets, have even raised the slim prospect of rates remaining on hold. Despite the softening economic environment, with the Reserve regularly stating the need to quickly move rates towards more neutral levels of 5 per cent, economists are now banking that official interest rates will hit 4.25 per cent within six months. Mr Symond told the Australia-Israel Chamber of Commerce such a rise would hurt the vulnerable. "Hopefully Glenn Stevens follows through with only gradual increases," he said.

"That's all we need. Let's hope they don't follow through with increases as dramatic as they cut on the way down. "An increase of 1 per cent over time is not going to make much difference, but 2 per cent and from there on, there are going to be a lot of people lose their homes." His sentiments were backed up by the Australian Retail Association. Executive director Russell Zimmerman said retailers were calling for calm from the Reserve and a hold on rates till next year to allow the sprouts of economic recovery to bear some fruit. "Retailers are concerned that interest rate rises now could slow down the wheels of economic recovery that are just starting to turn. Retailers are looking for a bit more momentum before higher interest rates start to take cash away from consumers," he said. Although higher interest rates will hurt its business, Myer was left licking wounds of a different kind yesterday.

The department chain, fronted by fashion icon Jennifer Hawkins, relisted its shares on the Australian sharemarket on a day of heavy selling across the board. Myer's shareholders, which include Hawkins, saw their initial investment in the company drop a staggering 8.5 per cent in minutes. Meanwhile, billionaire property developer Harry Triguboff suggested that interest rates need not be on pause, but should be clipped further to levels in the UK and US.

Pounds to Australian Dollars = 1.8157
Euros To Australian Dollars = 1.6357
Australian Dollars to US Dollars = 0.9023
Australian Dollars to New Zealand Dollars = 1.2450

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Australian Property Prices set to rise even with stronger Australian Dollar

Australian Dollar Rate Outlook

TASMANIA'S Clarence City is Australia’s best property bargain according to a list of the country’s 100 hottest suburbs. Investors can pick up an average house in Clarence City suburbs of Clarendon Vale and Rokeby to Hobart's east for just $178,000, according to a report in Australian Property Investor magazine.

It’s a "long-term hold" but the area will see significant growth in five to seven years, the report says. The magazine asked Australia’s top property experts to list the hottest 100 suburbs poised for "strong capital growth" over the next 12 months.

With an average median house price of $548,000 across the 100 locations, news.com.au identified the cheapest of those suburbs and they are listed below. You can read the full list in the magazine, which is out today. Also released today, the Australian Property Monitors quarterly house price series showed house price growth of 3.7 per cent over the September quarter.

"Moderate to strong growth is expected across the market as a whole for the remainder of 2009 and 2010," APM's Matthew Bell said. "The question as to whether this growth can be sustained throughout 2010 depends on how quickly mortgage rates rise in the next six months," Mr Bell said.

Hottest suburbs with the lowest average house price

Queensland
Gympie $260,000
Ipswich $269,000
Kingaroy $270,000
Beaudesert $311,000

New South Wales
Gunnedah $208,000
Branxton $349,000
Granville $353,000
Shoalhaven $388,000

Victoria
Portland $189,000
Redan $194,000
Hastings $270,000
Frankston $300,000

WA
Geraldton $345,000
Thornlie $363,000
Bassendean $415,000
Hamilton Hill $430,000

Tasmania
Clarence City $178,000
Lutana $282,000
Mount Nelson $420,000
Hobart $425,000

NT
Rapid Creek $568,000

South Australia
Ceduna $245,000
Glanville $249,000
O'Sullivan Beach $261,000
Christies Beach $301,000

ACT
Gungahlin $458,000

Pounds to Australian Dollars = 1.8218
Euros To Australian Dollars = 1.6294
Australian Dollars to US Dollars = 0.9037
Australian Dollars to New Zealand Dollars = 1.2450

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Best buy Australian Dollar as the exchange rate looks towards Parity

Australian Dollar Rate Outlook

The Australian dollar was once again a top performer to finish the week’s trade as speculators poured into the progressively higher-yielding Aussie currency. Hawkish rhetoric by Reserve Bank of Australia Governor Glenn Stevens underlined the bank’s resolve to tighten monetary policy sooner than later. Indeed, Overnight Index Swaps are now pricing in an impressive 200+ points of rate hikes in the coming 12 months-by far the most of any G7 central bank. All else remaining equal, this should provide solid Australian Dollar support against lower-yielding counterparts. Yet the pace of Australian Dollar appreciation has been nothing short of impressive, and one has to wonder whether the currency can continue its recent advances. An effectively empty economic calendar gives little in the way of foreseeable event risk in the week ahead, and as such it remains most important to watch for major moves in key asset classes.

A speech by RBA Governor Glenn Stevens set the tone for what may be an aggressive wave of monetary policy tightening. Stevens discusses monetary stimulus in light of the global financial crisis, emphasizing that Australia seems to have weathered the broader economic crisis and escaped relatively unharmed. Economic resilience suggests that previously aggressive interest rate cuts have done their job, and in fact the central bank has already begun reversing its monetary policy accommodation. In its recent rate hike the RBA stated that rate hikes should "gradually" be pulled back.

Yet Stevens surprised many when he effectively foreshadowed rate hikes with similar intensity to the large cuts we saw through the financial crisis. He clarifies that he does not believe that the Australian economy is currently "too strong", but he does go on to say "that the very low interest rate settings were designed for a weaker economy than we are in fact facing." Interest rate expectations jumped on the commentary, and in fact markets are now pricing in a 50 percent chance of an aggressive 50 basis point (0.50 percent) rate increase through the November meeting.

Expectations are running high for Australian Dollar yields and the currency itself. The key question in the weeks and months ahead will be whether reality can match those lofty expectations. As it stands, a number of respected research desks have called for Australian Dollar parity against the US Dollar rate in the coming months. Yet near record-high Aussie correlations to key commodity prices suggest that AUD forecasts may depend on broader moves in key financial asset classes. Suffice it to say, there should be no shortage of excitement in upcoming Australian Dollar trade.

or the full story visit www.dailyfx.com

Pounds to Australian Dollars = 1.7679
Euros To Australian Dollars = 1.6162
Australian Dollars to US Dollars = 0.9257
Australian Dollars to New Zealand Dollars = 1.2295

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Australian dollar could soon be worth 1.100 US Dollars

Australian Dollar Rate Outlook

THE Australian dollar appears headed towards parity with the US dollar after Reserve Bank governor Glenn Stevens agreed the economy's strength could drive it"way up" to $US1.10.
The dollar jumped after Mr Stevens also suggested that the Reserve Bank would not be “too timid” in further increasing the official interest rate, breaking through US92c to reach 14-month highs. His comments startled foreign exchange market analysts and encouraged money markets to bet that the Reserve would lift its cash rate from 3.25 per cent to at least 3.75 per cent before Christmas and keep lifting next year, The Australian reports.“I tend to agree with him,” the Commonwealth Bank’s chief currency strategist, Richard Grace, said of Mr Stevens’s Aussie dollar bullishness.

But while Mr Stevens suggested the dollar’s rise was the result of Australia’s economic vigour, Wayne Swan warned that it would hurt farmers and other export industries. “I do understand some people will do it really tough as a consequence of a higher AUD rate ,” the Treasurer said. Since October 2, just before the Reserve Bank lifted its 3 per cent “emergency” cash rate, the dollar has gained nearly 7 per cent, from US86c to US92.11c in European trading last night. The dollar’s rise could further increase the tension between the Reserve Bank’s rate rise move and the Rudd government’s rejection of calls to unwind its budget stimulus more quickly. In theory, an expansionary budget policy pushes up an economy’s exchange rate.

The Reserve Bank is not intervening in foreign exchange markets to dampen the currency’s ascent, which is akin to a policy tightening that mostly hits exporters and businesses that compete against imports. But it also contains inflation by making imports cheaper. The Australian sharemarket rose again yesterday on the back of improved investor confidence in the Australian and global economies, with the All Ordinaries index gaining 28.5 points or 0.59 per cent to hit a one-year high.

Mr Stevens was asked at a breakfast function in Perth whether the Reserve Bank had any tools to prevent speculators buying Australian dollars to $US1.10. Mr Stevens replied that, rather than speculators, there usually was a rational reason for big exchange rate movements. “You could do a scenario where the exchange rates goes way up,” he said. “We’ve got one of the better-performing economies in the world. Even at very low interest rates, we still have a positive differential and we’re a country where the people here are, I think, reasonably confident about the future and foreigners are fairly confident about our future, and it’s not entirely surprising that they’re a bit keen on the currency.”

Mr Stevens suggested that this could change if economic recoveries in other countries surprised on the upside. “But you could do a scenario of the one you suggest and, in that world, perhaps inflation is lower, but the reason the AUD exchange rate is up there is probably that there are some very strong growth dynamics and trade dynamics at work here.”

The Australian dollar exchange rate has not traded at parity with the US dollar rate since the local currency floated in late 1983, but appeared headed towards this level before the global crisis hit.

for the full story visit http://www.news.com.au

Pounds to Australian Dollars = 1.7738
Euros To Australian Dollars = 1.6155
Australian Dollars to US Dollars = 0.9226
Australian Dollars to New Zealand Dollars = 1.2395

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Get in the queue for an Australian property boom

Australian Dollar Rate Outlook

IT'S the proof we've been waiting for that the housing boom is back - at dinner tables across the country talk is returning to the old conversation chestnut, Australian property prices.

While the global financial crisis made us all armchair investment analysts, now lower interest rates, government bonuses and the first home market boom was again making property the hot topic.

On any given Saturday huge numbers of prospective buyers are flocking to open houses everywhere. Nowhere is the craze more evident than in the median home market, where young families are trying to make the most of the demand from first time buyers to sell and trade up for more space.

But with medium-priced houses in limited supply, real estate circles are rife with rumours of auction punch-ups and inspection queues rivalling nightclubs. Sydney's Michelle Wheeler and Reima Woolhouse have been riding the $700,000 to $1.2 million price bracket explosion for six months.

The pair recently sold two properties and have been renting while they try to find a home with a bit of space. "There are properties we wanted to buy but we didn't make the first open house because they have sold before then or they just didn't tick the right boxes for us," Ms Wheeler said. "We've been starting to feel a bit disheartened. "We've been saying to each other selling the two properties was less stressful than buying."

On Saturday, the pair inspected an original Californian bungalow on Iandra St, Concord West.
Likely to sell for about $900,000 at auction next month, it is on the market for the first time in 45 years and requires significant work. The home had more than 35 groups through, many expressing interest. Paul Pettenon from Raine and Horne Concord said homes such as that had been selling just days after being advertised.

Recently, a two-bedroom Concord property that did make it to auction attracted 36 registered bidders. "It was mayhem, you couldn't control it actually," he said.

"I have been in real estate for 15 years and I have never seen anything like it."
And it is not just the inner-west. Megan Bruton from McGrath Hunters Hill said open houses around Ryde have needed three open house agents to deal with the record numbers of people inspecting homes.

"Previously when we launched a property we would get 20 or 30 groups through if it was really hot," she said. "But now we are getting 60 to 75 which equates to about 120 to 200 people for just a half-hour." Business analyst for LJ Hooker David Maher said low stock and high demand in the second-home buyer's bracket was making a seller's market.

"What everyone has been focusing on is the first-home buyer's market but that is simply not true," he said. According to his figures, homes in the $700,000 to $1.2 million range were selling at auction 80 per cent of the time, up from the beginning of the year when only 40 per cent were selling. "Auction clearance rates haven't been this good in many years," Mr Maher said.

Real Estate Institute of NSW president Steve Martin said many new people were in the market.
"First-home buyers in particular are feeling in control of their own destiny and not in the hands of landlords," he said. "When there is insecurity, buying property becomes a security."

For the full story visit www.news.com.au

Pounds to Australian Dollars = 2.0800

Euros To Australian Dollars = 1.7700

Australian Dollars to US Dollars = 0.7826

Australian Dollars to New Zealand Dollars = 1.2450

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Australian Banks Downgraded

Australian Dollar Rate Outlook

Moody's says that its industry outlook for banking systems in Australia and New Zealand is negative, reflecting the impact of the slowdowns in global and domestic economies, but both
systems also remain robust.

These headlines helped keep New Zealand Dollars and Australian Dollars exchange rate trading near the lows overnight, and on the open in London we've sold Australian Dollars for real money names. However the dip in New Zealand Dollars rate has seen some good exporter demand as resting bids are finally filled.

Pounds to Australian Dollars = 2.0800
Euros To Australian Dollars = 1.7700
Australian Dollars to US Dollars = 0.7826
Australian Dollars to New Zealand Dollars = 1.2450

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Australian Dollar fall was due to hedge funds

Australian Dollar Rate Outlook

The precipitous fall in the Australian dollar was increasingly driven by the whims of financial market players, such as hedge funds, while "real" economic developments played a diminishing role, The Sydney Morning Herald reports citing the Reserve Bank of Australia. The plunging Australian dollar shocked markets last year when it toppled from within a whisker of $1.00 to almost 60 US cents, a move which few analysts had predicted. In new research, the RBA says that fund managers' balance sheet adjustments and their use of the dollar as a proxy for emerging markets have exacerbated the dollar's slump, the report says.

Pounds to Australian Dollars = 2.0300
Euros To Australian Dollars = 1.7800
Australian Dollars to US Dollars = 0.7800
Australian Dollars to New Zealand Dollars = 1.2690

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Australian Dollar Exchange Rate Outlook is Higher

Australian Dollar Rate Outlook

Some of the Foreign Exchange charts are peculiar. We understand the US dollar Swiss franc chart is strange because of the carry trade/safe-haven/intervention stories. But look at the Australian Dollar chart. When we draw a channel from the lowest low in November, what we get is a horizontal, flat channel, not a rising one. Of course we can draw a channel in a shorter time frame and get an upmove, but in the Big-Picture, we do not get a true rising trend. This could imply that some foreign exchange traders are buying "commodity currencies" on a bet that US recovery will boost demand, but they are not really committed to the global recovery scenario just yet. Given the relatively high yield in the Australian Dollar, we think it should be higher….

Since it's not, traders are not yet convinced the recession bottom is in.

The flat AUD makes us suspect the euros to US dollars uptrend. Maybe it’s just a "move" and not a trend. The euro/yen is rising without pause or correction, so have to wonder if the euro exchange rate is strong mostly because the yen is weak. Today is "pullback Tuesday" and we are getting the usual profit-taking after a big move the week before, but we also wonder if the pullback could take on a life of its own. As foreign exchange traders, we must jump on every bandwagon and seeming breakout, but as economic analysts, we need to look at a wider timeframe chart and this time the wider chart is not offering comfort and confirmation.

If you have any questions or want a free quote feel free to call + 44 207 183 2790

Pounds to Australian Dollars = 2.0935
Euros To Australian Dollars = 1.9384
Australian Dollars to US Dollars = 06965
Australian Dollars to New Zealand Dollars = 1.2394

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Pounds to Australian Dollars EXchange Rate still heading lower

Hi All,

Seems that our thought that the Australian Economy would continue to outperform the rest of the world has come true (for now) with the Reserve Bank of Australia holding on cut australian interest rates this month and looking to do the same again whilst they see the full effect of the previous stimulus packages. This is very step contrast to here in the UK were the pounds woes keep getting worse and worse as you predicted back in Feburary in our post Australian Dollar Rate Outlook - Australian economy continues to surprise.

We are now at an interesting point is it time to give up on this view or is the pounds to Australian Dollars rate still heading lower. I personally feel that there is limited opportunity for the australian dollar rate to go up as the good news could start coming to an end and as there has been so much bad news from the uk - surely we are due some good?

So for those of you moving to australia look for the opportunity to sell pounds buy australian dollars at 2.1700 or better if you can.

If you have any questions or want a free quote feel free to call + 44 207 183 2790

Pounds to Australian Dollars = 2.0960
Euros To Australian Dollars = 1.9714
Australian Dollars to US Dollars = 06902
Australian Dollars to New Zealand Dollars = 1.2285

Bye For Now

Damian George
IMS Foreign Exchange
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Australian Dollar seen stronger against the Pound, Euro and US Dollar

Australian Dollar Rate Outlook

The Australian Dollar has opened higher for the eighth straight local session as investors continued to sell US dollars in response to the US Federal Reserve decision to start buying US Treasuries.

At 7am AEDT, the Australian dollar rate was trading at $US 0.6860/64, up from yesterday's close of $US0.6746/48. It was the strongest start to the local foreign exchange trading day since January 12 this year, when the unit began at $US0.7028/35. During the overnight offshore session, the unit moved between a low of $US0.6734 and a high of $US0.6943.

The Australian dollar exchange rate rallied through most of the offshore session, with the focus remaining on the US Federal Reserve's intention to purchase long-dated US Treasury securities.
GFT Forex director of currency research Kathy Lien said the dollar advanced on continued US dollar weakness."I think that weakness will extend over the next few weeks and that could lead to further gains in the Aussie dollar and the euro exchange rate," Ms Lien said from New York.
"Even though US equities are lower and bond yields are higher, the clearest ramifications of the Fed's actions yesterday is that they will need to print US dollars."

Full story visit www.news.com.au

Pounds to Australian Dollars = 2.0960
Euros To Australian Dollars = 1.9714
Australian Dollars to US Dollars = 06902
Australian Dollars to New Zealand Dollars = 1.2285

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Australia seems to be the odd man out these days - the only major economy not in recession

Australian Dollar Rate Outlook

Australia Dollar seems to be the odd man out these days - the only major economy not in recession and with a central bank that yesterday declined to cut rates because the economy is okay.

Today GDP for Q4 fell 0.5% q/q after rising a feeble 0.1% in Q3, just escaping the formal definition of recession. Q4 was below forecasts of ongoing growth of 0.1% or perhaps 0.2%, so a surprise. On the y/y basis, GDP growth decelerated from 1.9% in Q3 to only 0.3% in Q4. A bank analyst writes that for this year, Australia will probably get a minor contraction of 0.25%. This is actually not too bad and certainly better than Japan, whose GDP contracted over 12% y/y in Q4. And if China comes back with any oomph, exports could be the leader.

The Australian Dollar fell on the surprise GDP news but we wonder if it doesn’t have some serious support. Growth counts. Relative growth counts, too. If the Reserve Bank of Australia can avoid cutting rates, Australia will keep its title of most desired investment currency - relative returns count most of all.

Pounds to Australian Dollars = 2.1700
Euros To Australian Dollars = 1.9400
Australian Dollars to US Dollars = 06500
Australian Dollars to New Zealand Dollars = 1.2832

Bye For Now

Barbara Rockefeller

Reserve Bank of Australia left rates unchanged at 3.25%

Australian Dollar Rate Outlook

RBA: The Reserve Bank of Australia left rates unchanged at 3.25% Tuesday call.

Comments from RBA Governor Stevens:

"Demand has not weakened as much as in other countries and, on the basis of currently available information, the Australian economy has not experienced the sort of large contraction seen elsewhere. The Australian financial system remains strong and the monetary policy transmission process is working to deliver large reductions in interest rates to end borrowers. Nonetheless, economic conditions are clearly weak, and given the speed and scale of the global economic deterioration and its effect on confidence, weak conditions are likely to continue in the near term. Inflation is likely to decline over time.... There has already been a major change in both monetary and fiscal policy.... Together with the substantial fiscal initiatives, the cumulative decline in interest rates will provide significant support to domestic demand over the period ahead....The Board will consider the position again at its next meeting"

The Australian Dollar exchange rate was the main winner on the robust nature of Gov Stevens comments and RBA's and desision and was up more than 2% across the board.

Pounds to Australian Dollars = 2.2218
Euros To Australian Dollars = 1.9600
Australian Dollars to US Dollars = 06445
Australian Dollars to New Zealand Dollars = 1.2900

Bye For Now

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Interest rates set to hit record low tomorrow

Australian Dollar Rate Outlook

Australian interest rates are tipped to fall to record lows tomorrow, as the effects of the global downturn threaten to hit our economy hard. Thirteen of 16 economists surveyed expect the Reserve Bank of Australia to cut the official cash rate at its monthly board meeting tomorrow.

The median forecast was for a 50-basis-point rate cut.

That would take the cash interest rate to a record low of 2.75 per cent.

A further 50-basis-point cut, if passed on in full by lenders, would knock another $77.96 a month off the average mortgage of $249,645 and would send the cash rate under the record low monthly average rate of 2.89 per cent seen in January, 1960. While domestic business data is still strong, many economists say deteriorating conditions among Australia's key trading partners will weigh on the domestic economy.

More optimistic analysts said the run of rate cuts and $52 billion in Federal Government stimulus programs would support local demand. shane of sydney RBC Capital Markets senior economist Su-Lin Ong said a 50-basis-point rate cut in March was a close call, with the Reserve near the end of its easing cycle.

"It's pretty clear they are very reluctant to cut any more but the reason we think a move is justified is the global downturn has worsened since the last board meeting," she said.

UBS senior economist George Tharenou said the prospect of a technical recession - measured by two consecutive quarters of negative economic growth - in the first half of this year justified the need for a 50-basis-point cut this week.

ANZ economist Riki Polygenis, however, said the economy is yet to feel the full effects of the large Reserve rate cuts since September. That reinforced the case for a 25-basis-point rate cut this month.

For the full story visit http://www.news.com.au/business/money/story/0,28323,25125462-5016110,00.html

Pounds to Australian Dollars = 2.2218

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First home buyers boost Australian new home sales

Australian Dollar Rate Outlook

NEW Australian home sales surged by almost 9 per cent per cent in January thanks to increased activity by new home buyers, a survey shows.

The Housing Industry Association (HIA) said the best home affordability conditions in five years and a boost to the first home owners grant had propelled the sale of new detached houses.
Detached home sales increased by 9.8 per cent in the month and were up by 3 per cent for the three-months to January.

But pre-contract sales of apartments and home units declined for the fourth consecutive month, indicating a continued softness in rental investor activity.
"A better start to 2009 for new home sales is an encouraging result,'' HIA chief economist Harley Dale said.

"But a sustained recovery in new home construction will rely on trade-up buyers and investors returning to the market, and the timely procurement of the planned 20,000 new public and community housing dwellings.''

Dr Dale said the unlocking of many of the private dwelling projects caught up in the credit crunch would go a long way to ensuring a broad-based private sector housing recovery.

For the full story visit http://www.news.com.au

Pounds to Australian Dollars = 2.2230

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Australian Dollar Rate Outlook - Australian economy continues to surprise

Australian Dollar Rate Outlook

The Australian economy continues to surprise to the upside and Governor Stevens comments last Friday suggest that the Reserve Bank of Australian not to cut Australian mortgage rates when they meet next week. This is against the Foreign exchange markets current view of a 0.50% interest rate cut. If the RBA doesn't cut rates we expect that the that the Australian dollar will rally against the pound, us dollar, euro and New Zealand dollar. (this is a view shared by UBS that have stated that they favor the AUDNZD to target 1.3300 from its current level of 1.2720.)

So how does that effect you if you need to buy Australian dollars?

We suggest that Prudence is needed if you are migrating to Australia and we have suggested our clients lock in 2.2000 plus in regards to the pounds to Australian dollar exchange rate as this rate could easily fall back below 2.1400 in the coming days.

Continued bad news from the UK cant be ignored much longer and foreign exchange traders tend to behave like sheep and we switch their views much quicker than many realise and I wouldn't be surprised to see an exchange rate of 2.1000 within 48hrs.

If you want to talk through your options and a free quote please call us at IMS Foreign Exchange on +44 207 183 2790

Pounds to Australian Dollars Exchange rate = 2.22028
Euros to Australian Dollars Exchange rate = 1.9800
US Dollars to Australian Dollars Exchange rate = 0.6348
New Zealand Dollars to Australian Dollars Exchange rate = 1.2730

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Australian Homes most affordable in five years at Australian Mortgage Rates Fall

Australian Mortgages update

THE Australian dream of owning a home is more affordable now than it has been for five years following lower interest rates and greater Government subsidies, a report says.

The Housing Industry Association and Commonwealth Bank First Home Buyer Affordability index improved by 39.2 per cent to 153.6 points in the December quarter from 110.3 index points for the September quarter.

First home buyers last had housing this affordable in the March quarter 2003, according to the index. HIA chief executive Chris Lamont said lower mortgage rates and the boost to the first home owners scheme made it easier to buy a house.

"For would be first home buyers, conditions have improved significantly and clearly many Australians are taking up the opportunity to get into home ownership," Mr Lamont said in a statement."Cuts with interest rates and the first home owners grant have made a large impact.''

The Reserve Bank of Australia (RBA) lowered the cash rate by three percentage points to a six-year-low of 4.25 per cent in the last four months of 2008.
And the central bank cut the cash rate another one percentage point to a 45-year-low of 3.25 per cent on February 3 in a bid to cushion the domestic economy from a possible recession.
Commercial banks have lowered their standard variable mortgage rates by an average 3.75 percent points in response since September last year.

Repayments on an average home loan fell by 26 per cent to $2,056 a month by the end of the December, from $2796 the previous quarter.

In mid-October, the Federal Government doubled the first home owners grant to $14,000 for established dwellings and tripled it to $21,000 for newly built homes until June 30.
Households would need an income around $70,000 to buy a modest home, the report said.

"Previously, a household would have to be earning in the order of $85,000 to afford a modestly priced home without going into severe mortgage stress,'' Mr Lamont said.

"The improvement in housing affordability means those on a more modest income can now contemplate a home of their own.''

Buying a home was more affordable in all capital cities and regional areas during the December quarter, the report said, with the largest improvement occurring in Perth, Brisbane and regional Western Australia.

For the full story visit www.news.com.au

Pounds to Australian Dollars = 2.2230

Bye For Now

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Australian Dollar - one Senator in Australia’s Parliament derailed the A$42 billion stimulus package

Foreign Exchange - Australian Dollar Outlook

In a shocking development - almost as shocking as the news that the wildfires were the result of arson - one Senator in Australia’s Parliament derailed the A$42 billion stimulus package because it neglected to contain provision for the Murray-Darling River system. To be fair, this area produces half of Australia’s farm products, although the focus of the plan was more on
social spending with a little infrastructure spending.

The bill will be amended and re-introduced for a vote as soon as tomorrow.

Pounds to Australian Dollars exchange rate currently 2.1983

Bye For Now

Barbara Rockefeller
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fiscal stimulus would help Australia avoid recession

Foreign Exchange - Australian Dollar Outlook :

The Australian Dollar was firm yesterday, rising off the early low of 6245 to an intraday high of 6357 on expectations of a rate cut and stimulus plan to be annoucned overnight. We expected a "buy on the rumor" effect and got it to a high of 6421 (or a 38% retracement of the previous downmove). But then the "sell on the news" effect kicked in, and the A$ sank back to 6334. The move may not be over now that the US dollar is in an overall corrective mode. We imagine the corrective move could reach as high as 6550 before it fizzles out. This is the channel top on the hourly chart and near the 62% retracement. But probably more important is the Australian Dollar vs Japanese Yen, which we don’t usually follow. It got a minor bit of support from
the announcement but its still headed for a test of the lowest-ever low of 55.08 from last October.

The hard news is that the Reserve Bank cut rates by a full 1% to 3.25%, the lowest since 1964, and announced a new stimulus package of A$42 billion, to be focussed on infrastructure with some payments to consumers. Bloomberg says the packkage includes A$12.7 billion in grants to families and low-income earners and A$28.8 billion for infrastructure. It will help send the nation’s budget into an A$22.5 billion deficit, the first shortfall since fiscal 2001-02. The earlier Oct stimulus of about AUD $ 10 billion went mostly to low-income sectors like pensioners.

Treasurer Swan said “The weight of the global recession is now bearing down on the Australian economy. Economic growth is slowing and employment will weaken.” Unemployment will probably rise from 4.5% in Dec to 7% by the middle of next year, and growth will be lucky to hit 1% at the end of the fiscla year in June. The FT reports “Mr Swan said the fiscal stimulus would help Australia avoid recession by boosting growth by 0.5 per cent in 2008-09, rising to 0.75 to 1 per cent the following year. The International Monetary Fund at the weekend forecast Australia’s economy would contract by 0.2 per cent in calendar 2009.”

Bye For Now

Barbara Rockefeller
Forex Trading Reports

Pounds to Australian Dollars exchange rate currently 2.2250

Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!

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The Australian Dollar hit a 25-year high of 98.49¢ in July and has since plunged 34%.

Foreign Exchange - Australian Dollar Outlook

After the Reserve Bank of New Zealand cut rates by a mind-blowing 150 bp, the NZ
dollar exchange rate fell dramatically by over 5%. Some Foreign Exchange analysts say the Australian dollar is next, with the Reserve Bank meeting next Tuesday (Feb 3) and probably cutting rates by 1% to 3.25%. After that another 1% cut is in store to 2.25%. Bloomberg reports 3.25% would be the lowest cash rate target since targeting began in 1990 and the lowest since 1964. A Standard Chartered foreign exchange analyst predicts the Australian Dollar will fall as much as 15% by end-June or about 60¢, before recovering to 72¢ by year-end.

The Australian Dollar hit a 25-year high of 98.49¢ in July and has since plunged 34%.

Bye For Now

Barbara Rockefeller

Pounds to Australian Dollars exchange rate currently 2.2700

Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!

Contact IMS Foreign Exchange + 44 207 183 2790

Australian Rents recorded their highest increase since 1988

Rent price rises at 20-year high
By Milanda Rout ,The Australian, January 29, 2009 12:00am

RENTS have recorded their highest increase since 1988 amid fears the rental crisis will only get worse as the impact of the global recession takes hold.

Latest figures from the Australian Bureau of Statistics show the annual rate of growth in rents across the country has jumped to 8.4 per cent in the year to last month, up 2 per cent from 2007, The Australian reported.

The statistics also reveal the increase in rents has jumped from 5.4 per cent to 8 per cent in Sydney, 11.2 per cent to 12.2 per cent in Perth and 8.6 per cent to 10.1 per cent in Brisbane.

Adelaide also recorded an increase in residential rental growth of 4.7 per cent to 5.4 per cent and Melbourne jumped to 6.6 per cent from 5.4 per cent.

BIS Shrapnel senior economist Jason Anderson said the rental market was only going to get worse as the country's economy faced a possible recession.

Matk Harwood of Canberra He said the roots of the rental crisis before the economic downturn were the significant increase in immigration and high interest rates that left a shortage of about 100,000 houses.

But falling interest rates were yet to have an impact on the rental shortage because construction of much-needed properties had decreased because of worsening economic conditions and higher unemployment. "This means the shortages are going to get worse over the next two years," Mr Anderson said.

"And it will probably put more pressure on the outer suburbs because that is where the cheaper rentals exist."

Mr Anderson said the rental rate increase of 8.4 per cent was well above the average 4 per cent wage increase, which made it even tougher for people facing difficult financial times.

The figures come as the rental vacancy rate decreased in Melbourne to 1.2 per cent last year from 1.6 per cent in 2007.

Read more on this at The Australian.

Pounds to Australian Dollars exchange rate currently 2.1700

Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!

Contact IMS Foreign Exchange + 44 207 183 2790

We look forward to seeing the euro exchange rate at 1.2000 before the end of March.

Foreign Exchange Outlook :

Today is the inauguration of Obama and eyes will be glued to the TV most of the day, We didn't get a stock market rally on the Obama Effect and already commentators are warning that expectations are excessive - the guy can't pull a rabbit out of the hat.

The WSJ writes of the recession forecast "The bottom could be postponed if Mr. Obama's stimulus plans are hamstrung or prove ineffective. And improvement won't be lasting until bank balance sheets are repaired, clearing the way for more-normal financial markets."

We think this is exactly right.

All the tax cuts and public works projects cannot restore confidence and repair the economy until the banks are fixed. So far the consensus of opinion is that the Treasury has botched TARP, announcing it would buy toxic assets before finding out what they would cost and needing to withdraw the plan. Still, the US is activist and the US is a very rich country, and so the US dollar is getting the benefit of the doubt so far. We have been calling it the phenomenon of "it’s worse elsewhere." Events of yesterday and today are making that point.

Many commentators are trying to give the appearance of wisdom by saying that the US will have to get inflation and the US will have to face a refusal to buy its massive new paper issuance, and disapproval of giant budget deficits and a wall of debt must be US dollar negative. We say these things may turn out to be true but are not a useful basis on which to place Foreign Exchange market trades today.

It is an orientation or perspective, and not necessarily the right one. What if the US gets inflation and giant deficits but other countries get more inflation and bigger deficits?

Realistically, the folks who will make the judgment are central bank reserve managers, sovereign wealth fund managers and private fund managers like the South Korean pension manager who thinks it's time to sell US dollars. We'd bet $10 that somebody from the South Korean government has that guy out behind the shed right now. The US is the military ally and defender of the country against the Chinese and Russians, and has been since the early 1950's.

It’s not nice to say your defender's paper is junk. We expect a retraction and apology any day now. We saw it when a Japanese finance minister made a threat to withdraw from US dollar reserves back around 1997 or 1998 after a G7 meeting in the US. The poor guy had to break his trip home (in Guam) and issue the apology and retraction.

Conditions are very different with China, the biggest or second biggest buyer of US paper. Foreign Exchange Analysts are already saying that Beijing will be Obama's first stop on the usual foreign trip after the inauguration. In fact, the biggest things Obama can do in the first few weeks are

1. find a way to fix the banking sector without becoming the first “socialist” president
2. fix the housing sector and end foreclosures and
3. talk the holders of US Treasuries to keep holding and to buy more.

This last category includes US citizens as well as the Asians. Health, energy and reversing the damage of last-minute Bush directives are less important. Oddly, Gitmo is not leass important because it’s a symbol of the US as a nation of laws, not of men.

We keep saying that every time "it's worse elsewhere," the US dollar exchange rates benefits.

This will continue to be true until bottom gets hit, and even then, the dollar can benefit on "first-in, first out." We look forward to seeing the euro exchange rate at 1.2000 before the end of March.

Buy for Now

Barbara Rockefeller

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Australian Dollar Exchange Rate Falls

Foreign Exchange - Australian Dollar Currency Update

Yesterday it was obvious on the hourly charts that some currencies had fallen too far, too fast and in too straight a line to keep going without a pause or corrective bounce. The Australian Dollar was the most glaring case, with the euro looking overdone, too. See the Australian Dollar chart. For foreign exchange trading purposes, when we see a corrective bounce coming, we guess a level where it would be safe to go short again. This time it was the previous intraday high of the previous day, or 1.3331. This time the correction went 7 points over that. Having succeeded in the guess one time doesn’t make it a good rule for every situation.

Bye For Now

Barbara Rockefeller

Foreign Exchange Trading

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Time to buy Pounds to New Zealand Dollars?

Buying New Zealand Dollars? Moving to New Zealand?

NZ commodity prices fell for the fifth consecutive month in December in a broad-based slide, a survey by ANZ Bank showed. ANZ's commodity price index fell 7.4% on the previous month, a sharper drop than in November, and was down 24.4% on a year earlier.
Commodity prices falling will be negative with NZ looking to the farming community to prop up a slowing economy.

I like buying GBPNZD - technically a well defined risk reward (target 2.80, stop 2.44) as commodity price fall flows through to the real economy in NZ and we see a dramatic slow down in spending (on a year on year basis) and further increase in unemployment.

This also plays a bounce in GBP from its currently depressed levels.

Buy for now

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