John from Moneycorp

Australian dollar update 14/02/2012

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    Sterling covered a two-cent range that included multiple changes of direction, a couple of them quite urgent. In the end, though, investors could find no reason to send it one way or the other. The pound opened in London yesterday unchanged on the week.

    There were precisely three Australian statistics to guide investors. ANZ's snapshot of job advertisements showed a worthwhile 6% rise in January, retail sales fell by -0.1% in December and AiG's performance of construction index slipped a point further into the red at 39.8.

    Rather more interesting was the Reserve Bank of Australia's decision to hold its benchmark Cash Rate at 4.25%. Recent low inflation readings had persuaded investors that the RBA would cut its benchmark interest rate. When it failed to do so, the Aussie dollar lurched higher, though failed to hold onto its gains.

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    The Australian dollar has strengthened as it reacted to news from the eurozone.

    China pledged its support to euro zone government debt and both of Greece’s major political parties have committed to implement austerity measures – this news lifted “risk appetite” therefore boosted the Aussie dollar.

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