"The projects completed over the past twelve months have added considerably to Australia's production capacity and will support strong commodity export volumes into the future."
- Wayne Calder deputy executive director of BREE
The Reserve Bank of Australia should be satisfied somehow with the recent performance of Aussie, which is considered to be at an "uncomfortably high" level, as currency plunged to 0.900 versus the greenback amid nation's trade gap almost doubling in October. The Australian Bureau of Statistics said Australian goods and service trade shortfall stood at $529 in October, following a $271 deficit in the prior month, bucking a two-month trend that saw the deficit fall in August and September. Analysts, however, expected a figure of $300 million. The report also showed that exports were almost unchanged over the corresponding period, while imports advanced 1% to $27.8 billion. Despite the disappointing figures, current account is likely to turn back into surplus soon, as the mining boom transitions from the investment phase into the export phase. Moreover, several large mining projects are approaching the completion phase, suggesting the supply will be ramped up. According to the latest projections from the Bureau of Resources and Energy Economics, shipments will soar more than 60% during the next five years.
Following sluggish third quarter growth and disappointing trade data, analysts are starting to express their concerns the RBA will be forced to make another rate cut to assure long-term economic growth.
© Dukascopy Bank SA