At its policy meeting on 3 September, the Reserve Bank of Australia (RBA) kept the cash rate on hold at a record-low of 2.50%. In its accompanying policy statement, the RBA said that rate cuts since late 2011 "supported interest-sensitive spending and asset values" and that falling rates will continue to support the economy.
The market took this comment, along with the RBA failing to say that the inflation outlook gave 'scope' to cut rates further (a familiar bit of RBA rhetoric), as the RBA’s easing bias is over. As a result, the Aussie dollar has rallied strongly since the RBA made this statement on 3 September, despite also saying the Aussie dollar "remains at a high level" and that it’s "possible" the rate will "depreciate further over time".
Updated: 4:30pm 25-09-2013
The ASX 200 rose 0.8% to close at 5,275.90, bouncing back after falling for the previous three consecutive sessions by an aggregate 1.17%, after hitting five-year high of 5,300 last Thursday.
Page 1 of 3
Click on the icon below to subscribe to our daily market update and/or weekly strategy note.
The Seismic Team
Daily Market Updates
White Label Daily Reports
Seismic Research is a research house that specialises in small-cap ASX-listed companies. Our goal is to find undervalued small-cap companies with near-term growth potential. We recommend companies based on their fundamental value, while keeping in mind the upcoming news flow.