Aud-Usd: Week Ending 4-13-2012

Aud-Usd: Week Ending 4-13-2012

hrly chart hit L_MLH @ 1.03370 and crossed the fib50% retreacement @ 1.03513
so i went long

RBA Minutes 17/04/2012

Equity prices in the United States rose by a further 3 per cent over the month, with the S&P 500 recording one of its strongest quarterly rises, but the Australian equity market had not experienced similar increases in recent times. In part, this reflected concerns about a slowdown in China (with Chinese equity prices falling by 6 per cent over the month), but it also reflected the composition of the local market, with the (recently underperforming) mining and financial sectors having a significantly greater weight in the local index, and technology stocks a much smaller weight, than in the S&P 500.

The Australian dollar had depreciated over the past month, but still remained at a high level. The recent depreciation, in part, reflected increased concerns among market participants about the effects of the moderation in Chinese growth on the Australian economy. Data released during the month confirmed that offshore purchases of Australian government debt were sizeable in the December quarter. Foreign holdings currently accounted for three-quarters of Commonwealth Government securities on issue and about one-third of state government debt.

Members noted that market pricing currently suggested just under an even chance of a reduction in the cash rate at the current meeting, with at least two reductions expected over the remainder of the year.

RBA Minutes 

Domestic Economic Conditions

Members noted that the national accounts for the December quarter had shown an increase in real GDP of 0.4 per cent in the quarter and 2.3 per cent over the year, which were both lower than expected. Private domestic demand had grown strongly over the year, led by growth in mining investment. However, growth in exports over 2011 had been weaker than expected, mainly because of lower coal exports, which, in turn, reflected a slower recovery from the floods in Queensland in early 2011, together with a slower take-up of new rail and port facilities in NSW and Queensland. Service exports had also been weak, reflecting a decline in the number of visas for foreign students as well as the effects of the higher exchange rate and lower external demand.

The national accounts showed that household consumption spending on both goods and services increased by around 3½ per cent over the year to December. This was a little higher than the rise in disposable income over the same period, and it was also stronger than suggested by other partial indicators, including the Bank's retail liaison. More recent indicators show that consumer sentiment fell in March to be a little below its average level, with household concerns regarding future unemployment at their highest level since mid 2009.

Members spent some time exploring reasons for the weakness in many of the indicators for housing turnover and building activity across Australia. They noted the apparent sensitivity of developers to the outlook for dwelling prices. New dwelling construction had fallen in the December quarter and there was little sign of a pick-up in building or loan approvals, though house prices had shown some signs of stabilising recently. While auction clearance rates in Sydney and Melbourne had picked up a bit of late, they remained below their average levels.

Indicators of business activity had been mixed. While business surveys suggested that overall conditions remained at average levels, there were significant differences across sectors and business confidence remained somewhat below average. Mining investment had increased by around 60 per cent over 2011 and, with a large number of projects already at a commitment stage, resource investment and export volumes appeared likely to increase further in coming years. In contrast, the level of non-mining investment had been flat over 2011, and recent surveys of business intentions suggested that non-mining investment was likely to remain sluggish for some time. Business credit growth had increased slightly over recent months, but remained low.

Exports had grown modestly in recent months, in part reflecting disruptions to the supply of bulk commodities. While preliminary data for February suggested that coal exports from Queensland had now returned to their pre-flood levels, production was still being affected by industrial action in Queensland and a shortage of explosives in NSW. In addition, export volumes of iron ore in the March quarter had been affected by cyclone activity, while service exports had been affected by the sharp fall in the number of international students in Australia over the past year or so, with no indications that this would be reversed in the near term. In contrast, the outlook for rural exports remained strong following a large winter crop and good rains across the eastern states.

Labour market conditions remained subdued, with employment falling by 15,000 in February and showing little change for much of the preceding year; increases in employment in mining, health and public administration had broadly offset declines in employment in manufacturing, retail trade and accommodation & food services. Despite this, the unemployment rate had remained at around 5¼ per cent for more than six months. Members noted, however, that an easing in average hours worked and a decline in the participation rate were indicative of a softer labour market than that implied by the unemployment rate.

There had been little new information on wages and prices this month. Recent business surveys and liaison indicated that firms expected wages to continue to grow at around, or a little slower than, their recent pace.