In January, unemployment rate in Australia has grown to the level of 6% (against the forecast of 5.8% and the level of the previous month of 58%). The number of jobs fell by 7900 (versus growth forecast of 15000). This data, which was released today by Australian bureau of statistics, was rather unexpected news, as in the past 6 months employment rate in the country was increasing.

As become known at the beginning of the month, annual inflation growth in January amounted to 0.4% amid decline of the global commodity prices. Price index of commodity in January fell by 25.8% plus to the decline by 23.2% in December.

Inflation growth and price pressure continue.

If employment rate continues to decrease in the country, it will cause deterioration in the labor market and almost zero growth of inflation, which in its turn can force ARB to consider the necessity of the reduction in the interest rate.

Meanwhile, steady rise in prices of the real estate acted as a factor, which prevented decrease in the interest rate of Australia. Now, the situation when the construction boom is declining, gives a chance of monetary policy easing in the country.

It is expected that RBA will decrease interest rate twice this year: up to 1.5% from the current 2.0% by 25 basis points in May and by 25 basis points in July.

According to the minutes of the meeting released yesterday, the US Fed will not increase interest rates in the USA in March. However, the prospects of the US economy are more positive than in Australia. Although inflation expectations in the USA are decreasing, labor market is stable and unemployment rate fell below 5%.

It is likely that the increase in the US interest rate will happen later than in March; however US monetary policy has been tightening.

Therefore, due to different policies of the US Fed and RBA, the pair AUD/USD might decline in the medium-term.




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