We're short-term fans of the Australian dollar. The global demand for commodities is incredibly strong because of the global economy, which is doing very well.
Growth momentum means offshore investors want to put their money in Australia.
Some of the highest interest rates in the world keep demand for the currency strong.
We forecast the Reserve Bank will raise rates by the middle of the year as it works to damp inflation pressures that are still pronounced.
We are just hoping the export sector kicks into growth during 2006. Improvement in the trade deficit has been a long-time coming.
The credit data, together with the TD-MI monthly inflation gauge for October suggest the Reserve Bank will leave interest rates unchanged,
There is still a huge amount of resilience in the consumer side of the economy,
Bollard is clearly frustrated. The kiwi dollar is too strong, adding to external imbalances by making it harder for exporters to compete. He would love to see the currency falling.
Bollard is clearly frustrated, ... The kiwi dollar is too strong, adding to external imbalances by making it harder for exporters to compete. He would love to see the currency falling.
Australia's current account is still at an uncomfortable level. We haven't yet seen the big pickup in exports we need to generate a narrowing in the current account.
A big increase could certainly get the Reserve Bank a little nervous. They'd be very close to pulling the trigger, raising the rate.
The news should provide support for the Australian dollar with a hint that the trade balance will continue to narrow.
The Australian dollar should be doing better in the short term because the rate differential is still supportive.
If RBNZ Governor Alan Bollard needed more information to stop hiking interest rates, the house-building consents data today fit the bill.
If you want sustained growth you need business investment to help drive it. The growth report combined with the election victory is good news: investors for years have been crying out for reform and have been hoping the Japanese economy can sustain growth.
Clearly they are seeing inflationary risks coming through, and they feel obliged to ensure that inflationary pressures don't build further some time down the track.
Housing construction is likely to be weak into the first half of 2006 and possibly beyond. It works against the tightening bias of the Reserve Bank.
For the New Zealand dollar it looks like one-way traffic. The scenario for cutting rates is now realistic, if not urgent.
The unemployment rate is likely to break below 5 percent in the months ahead. It will escalate the pressure on the Reserve Bank to raise interest rates, which in turn will be a shot in the arm for the Australian dollar.
The idea is that there will be more tax payers around in the future to support the retired.
The economy has come through a soft patch and is looking strong,
The case for a rate hike, while not totally compelling yet, is gaining a bit of momentum with these sort of numbers. On an interest-rate-differential and growth story, it should put the Australian dollar back in focus and see it move higher.
The case for a rate hike is clearly much stronger. The rest of the world is raising interest rates and global inflation rates are edging higher. Fuel-price increases will flow through to inflation.
A mid-year interest rate cut is looking less likely. We had forecast a rate cut in July. That's looking a lot shakier after today's number.
The market hasn't been paying enough attention to inflation risks as it should. The prospect of an interest-rate move higher in the months ahead will mean the Australian dollar will find some friends.
The market hasn't been paying enough attention to inflation risks as it should.
