Australia Interest Rates
Australia Interest Rates
During the September meeting, the Reserve Bank of Australia lowered its’ official cash (OCR) rate for the third time this year, to a new record low of 0.75 percent, cutting rates by 25 bps. The Reserve Bank has stated the rate cut has been to support employment and income growth for the Australian economy. Aiming to provide greater confidence that inflation will be consistent with the medium-term target.
Furthermore, Australian Policymakers signaled the need for an extended period of low interest rates, stating the central bank is prepared to continue the monetary policy ease if needed.
Interest rate cuts almost always result in the devaluation of a nation’s currency, and it has been no different for this rate cut. With the AUD/USD continuing strong downward movement this month following the Reserve Banks’ announcement. The Aussie dollar currently trading at $0.66985 level.
However, historically monetary policies have proven to be effective only in the short run, as money neutrality takes effect in long-term periods. The idea that money is neutral is derived from economic theory that explains, as a Reserve Bank increases the money supply, it essentially means an increase cash in the consumers pocket, driving up consumption of individuals, in turn pushing prices of goods upwards. Thus, in the long run inflation neutralises the increase in money supply.
United States Non-Farm Payroll posts 4.8 Million jobs in June, beating analysts’ expectations of a 3 million gain. The unemployment rate also fell to 11.1% in June, forecasted at 12.5%.
Gold Futures broke $1,800 yesterday, reaching a high of $1,804 on the Comex in New York after a surge of new Coronavirus cases alongside inflationary fears.
Technical analysis is a type of analysis derived purely from charts and the price movement of the security. The basis of technical analysis is that past price movement is a good indicator for future price movement. Technical analysis uses statistical trends such as trading volume and historical support / resistance levels to gauge the movement of the price in the future. This in contrast to fundamental analysis, which involves looking at a security from a financial and economic point of view.
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