The Australian dollar is sitting tight in late trading today, as the market awaits the latest decision on Interest rates from the Reserve Bank of Australia where analysts are divided 50 – 50 on the move.
At 7.02pm (GMT) the Aussie dollar was trading at US71.36c, virtually unchanged since the close of trade yesterday.
With nearly half of analysts expecting a rate cut from the RBA, extreme volatility is to be expected with a huge swing in either direction depending on the outcome.
The main reasons for the negative sentiment surrounding the Australian dollar is last week’s disastrous CPI numbers, as well as the continuing fall in the Iron ore price, which is so important to the local economy.
Another event which will play on the RBA’s mind is the manufacturing data out of China yesterday which rose 48.3 in October and racking up its 8th straight month under 50.
A number over 50 shows the economy is in expansion mode while a number below show a contraction.
Many investors say the only thing holding the RBA back from cutting rates is the overheated property sector, as they are afraid the move will bring more buyers into the market and push up prices further.
But even this sector is showing signs of cooling off, with houses prices growing just 0.2 percent in October which is well down on previous months.
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