11 Oct 2010 9:06 PM
|Sterling is down over 6 cents since the beginning of September. Mid month UK data was dominated by bad news by the house price index, helping toward a three cent drop at the end of the month. The Australian dollar has been swept higher mostly by the increased investor risk appetite and the attraction of a relatively high 4.5% yield.
In the meantime, last month we saw conflicting reports on the state of the UK economy with the IMF giving the Government rare praise for their deficit reduction plan whereas Adam Posen, a MPC member, spoke of the requirement for more quantitative easing in order for the UK to avoid a Japanese style slump.
In Australia we have seen the sales of new homes fall in Q2 by 2.6%, which is the fourth straight month of falls however more importantly China PMI rose to a 5-month high at 52.9, the key points was weaker house price data from Rightmove, RBA minutes signalled additional rate hikes boosting the dollar, and Australian job vacancies increased by 9.9%. Therefore there is a strong likelihood that we see the RBA raise rates to 4.75% at the end of the Month.
Current Central Bank Rates:
Australia (Reserve Bank): 4.50%
UK (Bank of England): 0.50%
GBP/AUD Highs & Lows of September:
Low: 1. 6203
A movement of: 6.41%
Difference this would make on |