John from Moneycorp

Australian dollar update 07/02/2012

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    The Australian and New Zealand dollars shared second place on the weekly league table, behind the South African rand. Friday brought another record high for the Aussie against the pound and the net cost to sterling was a cent and a half.

    If the Aussie had had to rely on the Australian economic data for its success, its performance would have been less sparkling. Surveys of the manufacturing and services sectors both produced positive results, but some of the other data were decidedly ropey – especially those that related to the housing market. New home sales, building permits and house prices all registered monthly declines.

    The Aussie dollar has been boosted by investor optimism and positive economic news from America, where payrolls expanded in January by twice as many as expected. With the US economy apparently back on track, the assumption was that demand for Australia's commodity exports would grow. Combined with the Reserve Bank of Australia’s decision to hold interest rates, where many had expected a cut, this has led to a strong Australian dollar.

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    The Australian dollar has weakened slightly.

    The reason for this is due to the Reserve Bank of Australia (RBA) lowering its inflation and growth forecasts for the first half of 2012. Within the RBA statement, they also suggested a future interest rate cut could happen depending on how the economy performs.

    In addition, there was data released from China regarding declining imports which was also negative for the Aussie.

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