Australian Dollar Outlook 5/2/2011
Australia: As the stream of good earnings announcements continues, the Dow was up 0.4% to 12,811 and the S&P 500 finished 0.2% higher at 1,364 along with European indices that were all higher.
The UK market was closed for the Royal Wedding. Tomorrow afternoon the RBA will announce its decision on interest rates and we believe there will be no change in the cash rate of 4.75%.
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Analysts will be poring over their statement for any subtle hints of further changes in interest rate policy. We expect a quiet day of trading today with the UK and much of Asia and Europe on holiday.
The 1.1000 level for the AUD/USD has just been breached.
Majors: Persistent US Dollar selling continued and the EUR moved higher in pretty quiet trade.
There was little reaction to US data with March personal income at 0.5%, personal spending 0.6% and the Chicago PMI (67.6) and Michigan sentiment (69.8) coming in softer than forecast.
Warren Buffet spoke on the US fiscal position..."We're a growing country, and we're going to have a growing debt capacity." Warren Buffet argues that not raising the US federal debt ceiling would be "most asinine".
The USD will continue to feel the impact of QE2 and global commodity indices are now higher than their October 2008 peaks.
Proving the old saying that if you print money it loses value, gold approached yet another all-time high of US$1,570 an ounce, silver has had its largest monthly gain in almost 30 years and oil gained for an eighth straight month.
Middle East tensions still simmer and NATO strikes on a house containing Gadaffi killed one of his sons and three grandchildren.
More rate rises are expected in China as the Government tackles the strongest inflation rates since 2008 and the Chinese PMI was released over the weekend and surprisingly fell in April to 52.9 from 53.4.
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