-David Forrester, a senior vice president for Group of 10 foreign-exchange strategy at Macquarie Bank Ltd.
The decision to keep interest rates on hold provided another strong boost to the Aussie, sending the AUD/USD pair above 0.93 for the first time in four months. Comments the economy requires a period of stable interest rates completely diminished all fears that another rate cut is possible, providing a long-term bullish bias to the Australian currency. Additionally, Australia managed to attract 61 bids to its $700 million auction, the most since December sale. With the bid-to-cover ratio standing at an average of 4.28 during the last month's sales, investors are getting more confident about the long-term outlook for the Australian economy.
The economy is now in a better shape than several months ago, and another proof of that was a report from the Australian Bureau of Statistics. Even though they said building consents plunged 5% on a monthly basis in February, following a strong 6.8% jump a month earlier, on an annual basis the number of building approvals skydived 23.2%. With solid annual growth, the bump in the number of approval is suggesting RBA's decision to maintain its ultra-loose monetary policy contributed to the nation's housing market. The report also showed dwelling prices surged 9.3% year-on-year in the final quarter. While the situation in the property market looks promising, the RBA warned that the latest rise in house prices could be only a temporary occurrence provoked by the low interest-rate climate.
© Dukascopy Bank SA