The Australian dollar became less volatile than normal and more stable – somewhat similar to what is recently seen in the Chinese economy, that seems to have stabilized.
Nevertheless, the undercurrents in Australia aren’t that positive.
* This article is part of the December monthly forex report. You can download the full report by joining the newsletter in the form below.
- “Australia is like Greece” – This is a quote of an Australian millionaire, that warned about the impact of the cooling mining boom. The debate about the “end of the mining boom” is still going on in Australia, and the pessimists are gradually winning the argument, as more projects are cancelled. The comparison to Greece is of course ridiculous.
- Rates are back to crisis lows: Glenn Stevens and his colleagues lowered the interest rate back down to 3% – the trough of the crisis. The RBA did raise the rates in between, but the recent series of cuts sent it back down once again. The statement was relatively optimistic and the next rate decision is only in February, so this is already behind us for the time being.
- Housing Sector Slump: Like other countries, Australia enjoyed a housing boost, and many fear it will see a bust, or is already experiencing such a bust. The fresh building approvals number, that showed a drop of 7.6% is a clear warning sign. AIG’s construction index stands at 35.8 points – very deep in contraction territory.
- Consumers are slow: While Australia printed a rise of 0.5% in retail sales during October, November was already flat. Spending is not picking up.
During December, Chinese data will be followed as always. The economic giant has a tendency of pushing through interesting policy moves around Christmas / New Year’s.