It is hard to see how consumers can be very optimistic given current concerns about households' own finances and the outlook for the domestic economy. Also, sentiment surrounding the Australian labour market has been poor recently, which is being driven by headlines of job losses in structurally challenged industries and an increasingly dovish tone from the RBA.
Nonetheless, the fact the RBA didn't move to ease monetary policy at its last meeting, combined with previous independent rate hikes by the major Australian banks, appear to have hit household sentiment hard. Thus, home loans continue to slide, and we suspect underlying pessimism amongst Australian consumers will continue to weigh on home loan applications in coming months.
Overall, the RBA has historically focused on inflation and employment data when deciding on the path of interest rates, and recently the Australian labour market is showing some weakness after solid growth in late 2011. The pace of hiring has decelerated, with Australia's most labour-intensive sectors shedding jobs during Q1 2012 in contrast to continued job growth in the mining sector. These differences between mining and other parts of the economy highlight the nature of Australia's two-speed economy, as traditional industries undertake a period of structural change, owing partly to a high domestic dollar. On the other hand, the mining sector has proven resilient, with output and capex continuing to increase, spurring demand for labour.
At the RBA's previous meeting, Governor Stevens opened the door for another rate cut but indicated the board wanted to see Q1 inflation data before acting. Hence, if inflation remains below or near target, which we suspect it will, then we believe there is good chance the RBA will move to cut the official cash. Whether or not major Australian banks will follow suit is not as clear, given that they have proven their willingness to move independently of the reserve bank. http://forexcapitalmultiplier.com/
Nonetheless, the ASX 200 managed to perform a little better than other markets in Asia, and is currently in the red by around 0.82%, compared with -0.91% for the Nikkei 225 and -1.20% for the Hang Seng at the time of writing. Stock markets are being dragged lower by renewed fears of a possible Spanish bail-out latter in the year, as well as poor import data from China and a cautious tone by Feb Chairman Bernanke on the US recovery. Overall, the early risk rally of 2012 is coming into question which doesn't bode well for stock markets moving forward. http://tradevantage.us/
Despite the dollar shedding during the session, the euro failed to break through 1.3100 against the dollar, which is a proven resistance level for the pair. It was a similar story for NZD/USD, which failed to push through around 0.8180 after bouncing off a low around 0.8117. Thus, this retracement may not have enough steam to continue during the London session, given the concerns surrounding Europe's growth outlook, especially in regards to Spain. http://trade-
