The currently strong Australian Dollar is a favorable factor confirming that the Australian economy is getting stronger. This is what Wayne Swan, Australian Minster of Economy, told CNBC during his visit to Washington. However, according to him, not all the economic sectors are in good condition. The strong national currency has had a positive impact on Australia’s mining industry but the production businesses have been under pressure so far. However, in general it is a positive factor of the entire economy.
Next week Statistics Australia is going to release the official price data for the 1st quarter of 2011, which will allow us to evaluate the impact of the strong Australian Dollar and the recent natural disasters on the inflation in Australia. Even though the CPI data release is scheduled for May, Statistics Australia is going to publish the quarterly PPI data next week. These data can be used to make some conclusions about the future inflation.
The Reserve Bank of Australia forecasts that the CPI data will gain 0.5 base points in Q1 and Q2, which is conditioned by the recent floods and growing food prices. The inflation may grow from 2 up to 3%. Analysts for Commonwealth Bank share the opinion, taking into account the food and gasoline price growth (19% and 9% correspondingly). According to them the inflation in Australia will be gaining 0.6% per quarter. So by the end of 2011 the inflation increase is expected to reach 2.1%.
However numerous experts from the Melbourne Institute of Applied Economic and Social Research have a different point of view. They say that higher consumer prices are compensated by cheaper imports (as the Australian Dollar is strong), which reduces the inflation pressure. The CPI is showing a downward tendency and is expected to decline from 4.6% down to 3.5%.
FOREX. AUDUSD is currently being traded around the 29-year historic high. According to the Department of studying Masterforex-V trading system , wave a(C ) of Daily is over. Wave b(C ) will be formed until the MF pivot and sloping channel are overcome. The uptrend will be continued in the form of wave c(C ) while a bullish FZR of the corresponding wave level will update the 1,0580 high. If the MF pivot and sloping channel are broken below, the price will start forming a downward momentum of Daily4. Its “moment of truth” and a bearish FZR will show that the market is willing to reverse the mid-term trend through the classic ABC-correction pattern. Another pivot and sloping channel will become support levels.
