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GBP/AUD February Currency Update       started by HiFX on 08 Mar 2010   (22630)
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From HiFX

08 Mar 2010 11:02 PM
The big news from mid month was the employment report that saw the Unemployment Rate (5.3%) hit an 11 month low and Employment Change (+52.7k) outstrip expectations by nearly 3.5 times. The fifth straight month of employment increases fuelled expectations that the RBA rate hike pause may be short-lived and helped the AUD shrug off sovereign debt default worries and trade above 0.8900 for the first time in a week. Elsewhere the data was not quite so bullish as Westpac Consumer Sentiment (-2.6%) fell as interest rate concerns undermined confidence and Home Loans (-5.5% m/m) declined leaving the market pricing only a 20% chance of a rate hike at the next RBA meeting on March 2. This week Business Confidence and the Monetary Policy Meeting Minutes will be the highlights on the domestic front. In the meantime, at the end of February, The NAB Quarterly Business Confidence (15 from 8) survey showed businesses are more optimistic than at any time in the last 15 years. Sales and profitability are on the increase and this has driven a marked pick up in hiring. Prospects for the next 12 months also look positive with a solid rise in forward orders and a lift in investment intentions underpinning an extension to the recovery. A modest but rising proportion of businesses also reported that labour and materials had begun to constrain output. RBA Governor Stevens confirmed in testimony to a House of Representatives committee that official rates were still expansionary and that up to 100 basis points of hikes were still on the table. The normalisation of rates to around 5% is expected to be phased in gradually between now and the end of the year. Current Central Bank Rates: Australia (Reserve Bank): 3.75% (4% on the 2nd of March) UK (Bank of England): 0.50% GBP/AUD Highs & Lows of February: High: 1.8285 Low: 1.6988 A movement of: 7.63 % Difference this would make on