Morning Dealing Room Technical Report

Market Comment

Australia

The Reserve Bank of Australia leave the cash rate unchanged at 2.0% (as expected). The Bank pointed out: “In Australia, the available information suggests that moderate expansion in the economy continues. (…) the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate. (…) In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending.”

Australia recorded a trade deficit of A$3.10B (vs A$2.40B deficit expected, A$2.79B deficit in July), according to the government.

Australia ANZ weekly consumer confidence fell 0.5% to 110.0 in the week ending Oct 4, according to ANZ-Roy Morgan.

Foreign Exchange

The Euro was mixed against its major pairs , lower against the CHF, AUD and NZD. In Europe, German factory orders slid 1.8% in August after being down by 2.2% in July (revised from -1.4%). Economists anticipated a 0.5% increase. According to Halifax, UK house prices fell 0.9% in September after being up by 2.7% a month earlier. Consensus expected a 0.1% rise.

The Australian dollar was higher against its major pairs.