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Australia: October Unemployment and Stronger Aussie

Australia: October Unemployment and Stronger Aussie

The AUDUSD has trended higher for around a month, but a large portion of that could be attributed events outside Australia. Although the most recent data points point to a stronger Aussie but RBA actions in the past suggest that the currency may be weaker. These differences: How can we match them?

A little bit of a rewind

The minutes of the RBA’s last meeting were released a few days ago. It surprised everyone by raising rates lower than expected, and this was what caught the markets off guard. The reason for the concern about liquidity was what attracted a lot of attention. After the mini-budget disaster, the BOE had to intervene to support the bond markets.

Although inflation in Australia has increased in the last year, it is not as high as in major economies. Granted, Australia only keeps track of inflation on a quarterly basis, but the rate isn’t really near the double digits of the UK and the EU. The RBA is not as aggressive as the Fed in bringing down inflation.

Where is the policy going?

Concerns about liquidity are caused by low real yields, especially in the UK. Add the inflation-related loss to the interest on debt ,….

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