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Australian 2nd quarter GDP rebound justifies the RBA's wait and see approach.

Written by Sam Coxhead on September 7th, 2011.      0 comments

11:40 AM (AEST) The just released Australian 2nd quarter GDP number revealed a bounce back to growth of 1.2% against an expectation of 1.0%. This comes after the 1st quarter 1.2% decline in the economy following the widespread flooding that occurred in early in the year. The AUD has been boosted on the news as one would expect, of note against the NZD its appreciation is pushing the cross rate close to crucial levels. The pair is at .7813 (1.2800) and very much down at the bottom of the recent broader range .7800/.8000 (1.2820/ 1.2500). You can see the effect the liquid market of the NZD/AUD(AUD/NZD) has on the wider market, as the NZD selling against the AUD spreads through to other pairs, even though a better number in Australia is obviously good for the NZ economy.
The AUD has proven to be resilient after yesterday’s RBA monetary policy decision and statement. The divergence between the market pricing of easing and the continued rhetoric from the RBA has left some “sold” AUD participants covering their positions. The RBA’s wait and see approach does see prudent at this stage and means they have ample room for adjustments to monetary policy should the financial stresses in Europe rapidly spiral into a global credit event.
Next on the agenda in a busy week in Australia is the employment numbers tomorrow.
          Past 24 hours
  Current level Pre- AU GDP  % Chge AU GDP   Low High
NZD/USD 0.8255 0.8266 -0.13%   0.8202 0.8388
AUD/USD 1.0567 1.0541 0.25%   1.0478 1.0627
NZD/AUD 0.7810 0.7842 -0.41%   0.7804 0.7904
AUD/NZD 1.2804 1.2752 0.41%   1.2652 1.2814
NZD/GBP 0.5170 0.5179 -0.17%   0.5144 0.5185
NZD/EUR 0.5880 0.5892 -0.20%   0.5862 0.5913
NZD/YEN 63.90 64.00 -0.16%   63.46 64.69
NZD/CAD 0.8162 0.8180 -0.22%   0.8120 0.8280