Reserve Bank of Australia Monthly Bulletin, Growth to Slow Significantly

Reserve Bank of Australia Monthly Bulletin

Release Explanation: This is the monthly release from the Reserve Bank of Australia. It contains pertinent articles, speeches, statistical data, and other detailed analysis of current and future economic conditions that are present or might be in the near term for the Australian economy.

Trade Desk Thoughts: The international environment has weakened considerably. The Bank's forecasts incorporate a projection that average growth in Australia's major trading partners will slow sharply from around 3.75 percent in 2008 to around 2.25 percent in 2009. This compares with average growth of 5.25 percent in 2006 and 2007. The forecasts for the domestic economy are based on the technical assumption of a cash rate of 5.25 per cent throughout the forecast period to June quarter 2011. Growth in non-farm GDP is expected to slow from 2.50 percent over the year to the June quarter 2008 to around 1 per cent over the year to the June quarter 2009. Weak demand in Australia's major trading partners is expected to weigh on export growth. However, this will be offset to some extent by the sharp depreciation of the Australian dollar and strong increases in resource exports following the ramp-up in mining investment in recent years.

Forex technical Reaction: The Aussie has not moved much from this release. The pair is holding just below the neutral LFB pivot point at .6440.

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