 Australian Dollar trades broadly higher today, lifted partly by resurgence in risk sentiment, as well as robust PMI data reflecting the cyclical recovery in Australian economy. Improvement in the economic outlook reduces the immediate need of a rate cut by RBA. Judo Bank, while complied the PMI data, warned about the possibility for another rate hike if economic activity continues to pick up while inflation remains elevated. Additionally, there is growing concern among financial analysts that should Australia begin to see acceleration in inflation similar to recent trends in the US, more monetary tightening might be need. For now, though, the consensus holds that the bar for another RBA rate increase remains high. Japanese yen is the second strongest currency today, though its momentum is relatively weak. Comments from Japan indicating readiness for currency intervention have so far elicited muted responses from the markets. Nonetheless, increasing concerns are being voiced about the weaker Yen driving up prices, which would eventually leading to further tightening by BoJ. Nonetheless, market focus will be directed to BoJ's upcoming economic projections this Friday first... |
