Reserve Bank of Australia Monthly Policy Statement

Release Explanation: This is the quarterly 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 Reserve Bank of Australia has stated in its quarterly report that:

• The main factor of the synchronized deterioration in global activity started with the shock to confidence caused by the Lehman Brothers collapse in September of 2008.
• The weakening in spending and activity has been accompanied by a significant easing in world inflation.
• The global financial system remains under considerable strain.
• The combination of the severe global downturn and sharp declines seen in commodity prices represents a difficult environment for the Australian economy.
• The Australian financial system remains in better shape than many of its international counterparts.
• GDP has expanded by 1.9 percent over the year, while domestic demand was still growing at a relatively high rate of 4 percent.
• A number of businesses have announced cutbacks, particularly in the mining and construction sectors.
• Inflation has been relatively high in the recent period, but has moderated in the December quarter.

Forex technical Reaction: The aussie has weakened by 25 pips immediately after this report was released. The pair has fallen to just below the neutral LFB pivot point.

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