Speculation continues to mount for another interest rate cut in Australia.

Companies in Australia have signaled to the Bureau of Statistics that they plan to cut investment spending by 17%. The AFR says this would be the biggest cut to investment spending in 20 years and comes right on the back of Qantas announcing another record half year loss and the slashing of 5000 jobs.  Miners are looking to cut by 25% and manufacturing is looking to cut by 20%.

If you read the AFR I am sure you enjoy seeing David Rowe's daily cartoon. Today's is a beauty.

The Aussie Dollar sunk Thursday reaching new monthly low and sharply deteriorated against the Kiwi Dollar. The Ukraine and its economic woes are also weighing on emerging market currencies and with Russia's leader announcing he has 150,000 troops on standby it only added more weight to the buying activity in the traditional developed safety currencies such as the CHF, JPY and USD.

Weaker commodity prices also added fuel to the selling activity on the Aussie Dollar with further media reports Thursday about China’s internal economic challenges. Iron Ore fell more than 1.2% in early trade and is now down well over 10% for the year.
 

The Market Views on the US Dollar - LTG GoldRock

The US Dollar seemed to hold up well considering the negative close on Wall Street Friday and also the drop in existing home sales of 5.1%. The market expected a negative number of 3.5%. The US 10 Year Treasury Yield also dropped a touched and is trading at 2.73%. My prediction of 3.5% is not likely any time soon and will only be reached if the US can get itself back on track economically. What's going to help it get back on track? A change from winter to spring will certainly be welcomed.

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LTG GoldRock Reviews the Aussie Dollar

The Aussie Dollar slipped lower yesterday at 11.30am on the news that wages growth in Australia is at the lowest pace in 16 years. Lower wages growth is likely to keep inflation low and could impact the RBA's thoughts later this year regarding interest rates if the unemployment level keeps going higher and higher. I am now calling for at another interest rate cut in 2014 and the wages index figure Wednesday only backs up these thoughts. I am not a doomsayer, I am a realist but the Australian economy is nowhere near the improved position some analysts say it is. 

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Kiwi Retail Sales keeps the Kiwi Dollar in check.

A weaker than expected Retail Sales number for New Zealand has held back the buyers from adding to their long positions leading into the official Kiwi interest rate announcement at the end of the month. The January Retail Sales figure was expected to show growth of 1.7% in January however the number that printed on computer screens was 1.2% indicating the Kiwis didn't spend as exuberantly in January as anticipated.

Will this alter the RBNZ's decision to begin raising interest rates "soon"?  No, the RBNZ has indicated that interest rates need to return to more normal levels and to expect a rise in the official interest rate by 2.25% over the next 2 years.

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US Retail Sales drop with the weather blamed.

A winter freeze has been blamed for the poorer than expected US Retail Sales in January with the data showing a drop of 0.4%. The US Dollar has remained under selling pressure this week particularly against the Euro and Pound. You may recall a few days ago I mentioned the Euro and Pound would likely rise against the US Dollar as a result of money flows into Europe increasing while question marks remain around the US economic recovery.  That trend looks likely to continue in the medium term.

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