Australian Dollar: The strength of the Australian economy was evident once again yesterday following the release of a much stronger than forecast 1.2% rise in Retail Sales during January adding some support to the AUD/USD in early Asian trade. The news was tempered somewhat however with an unexpected 7% decline in Building Approvals for the same month keeping the Aussie dollar capped around the 90 cent mark heading into the RBA rate announcement. Australia’s central bank raised the official cash rate by 0.25% to 4% after keeping rates on hold the previous month sparking an immediate spike above 90. The move proved short lived however as the news was factored in by many traders with long positions being squared after the release. Offshore markets resumed the rally taking the AUD/USD back up to 0.9050 as the U.S dollar lost ground across the board with confidence returning amidst the expectation of new deficit reduction measures from Greece. Today sees the release of Q4 GDP data out of Australia with economic growth expected to have increased from 0.2% to around 0.7%.
- I expect a range today in the AUD/USD rate of 0.8985 to 0.9085
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