httpvh://www.youtube.com/watch?v=_TkCeTYVtX0
Local data not enough to inspire Governor Stevens.
• Australian data holds some surprise figures.
• UK economic growth too slow for the unemployed.
• UK data mediocre but holds little downside risk.
The Australian economic behemoth had a breather during the first half of the year however some data this week provides room for optimism. The RBA signalled early in the year that the prospect of a rate hike would come late in the year if at all and keeping with that theme they held interbank rates on hold this week at 4.75%. Some of the data released will provide the RBA with a pretence to consider a rate hike later this year. With the economy running at near full-employment, further jobs growth will precede monetary policy belt tightening. The economic data included strong Performance of Manufacturing data (52.9), growth in ANZ Job Ads (3.7%) while the Trade Surplus grew significantly, 2.3B. Building Permits (14.4%) and Retail Sales (0.6%) were both down heavily however, while the services industry contracted further. An unofficial inflation figure released fell within the RBA’s target band (2.9%), while minimal growth in other developed countries and a possible slowing of China’s growth will allow the RBA to keep it’s powder dry, putting less upward pressure on the AUDUSD cross.
Economic data out of the UK generally isn’t a focus for this report however with recent record highs achieved against the Pound Sterling, it’s pertinent to question their recovery. No doubt still congratulating themselves for not joining central Europe in adopting a single currency with some of the delinquent economic policy held within, the UK recovery may be finding some momentum. The UK recovery should be consistent yet prolonged as the austerity measures were adopted relatively early, with far less political collateral damage caused than its Atlantic neighbour. Generally the economic data has been mediocre for the UK since the GFC, without the significant volatility you’ll see in job numbers State-side. Fiscal expansion may be the best course given the amount of stability attached to the current policy settings as faster growth is needed to make up for the jobs lost in 2009.
The second Greek bailout has resulted in the probability of the UK’s first interest rate hike since the GFC held off until early 2012, despite some high inflation figures. Data this week included a poor Consumer Confidence (-25) figure while the Halifax House Prices (1.2%) showed improvement. PMI Services (53.9) expanded further while PMI Manufacturing (51.3) showed the manufacturing industry expanding but at a slower pace. Both PMI figures were in the mid to high 50’s pre-GFC. Yesterday, the Chinese PBOC raised rates, withdrawing some momentum for the global economic growth story.
Visit our homepage for more information on how we can help you with your foreign exchange requirements.