John from Moneycorp

Australian dollar update 13/06/2012

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    The strong figure for Australia's economic growth in the first quarter of the year was not matched by the data that followed during the Jubilee-shortened three-day week. Just 24 hours later the construction sector purchasing managers' index edged lower again, reminding investors that Australian property and real estate are having a tough time of it. For two years now the construction PMI has been below 50, indicating falling activity.

    Nevertheless, giving a speech on Friday Reserve Bank of Australia Governor Glenn Stevens was upbeat. Insisting that "Australia's glass is at least half full" Mr Stevens criticised an "unrelentingly gloomy" public. He pressed the point that "The financial system is sound. Our government is one among only a small number rated AAA, with manageable debt."

    And the Australian dollar had another good week. It strengthened against all but the New Zealand dollar.

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    The news from Greece is that the New Democracy party will attempt to form a Greek coalition government, with other parties backing the international bailout, after a narrow election victory which eased fears of a sudden exit from the euro. Financial markets have reacted positively but attention will now be turned to see how quickly a new government can be formed.

     

    The result has greatly reduced the chances of an imminent Greek exit from the euro.

     

    As the situation is stable for now, the Aussie dollar remains strong against the pound.

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