AUDUSD Long Position Trade Aud Economy is looking positive
When assessing all of the data for Australia, the economy is in a much more stable place which would have been one of the goals from the people who lead and set the countries monetary and fiscal policies. Inflation has hit its peak 4 quarters ago and has been stepping down slowly before reaching the RBA’s target of 2.5 by 2025, which with all things taken into account is a possibility.
With interest rates at a high, there are rumblings of decreasing the current rate of 4.35% slowly, however, we will know much more during the first 2 data set releases of 2024 but as for now the higher interest rates are still attracting business into the internal and external business into the economy which is a plus for the Australian economy.
Geopolitical tensions across the world in terms of wars have added value to the exports of Australia, however, the continuous tensions with their biggest trade partners China is definitely something that could derail the good done in supporting the Australian Economy a “The population have been spending and spending well as retail sales were up during the summer and this is something we could see repeated during the festive season as the families and business will be busy which will potentially produce a good reading in terms of retail sales in Australia. This is supported by the higher wage growth, which would mean people will have more disposable income and to spend on goods and services and even save. With Private house approvals also doing well in the economy this sounds out the economy as much more stable as private house approvals give us an early indication of whether there is a recession in progress or not.
Macro indicators point towards an ease of pressure on the Australian economy almost as if Australia are at the halfway point of their recovery from the Covid 19 pandemic as they set their sights on bringing down inflation and interest rates. So far, the confidence that Australia would be one of the strongest nations coming out of the recession has been correct analysis with reducing the unemployment rate rather quickly playing a factor in that, but the work is not done. So, whilst there is optimism heading into Q2, there are also some concerns to be aware coming into the Q2.
Australian exports represent over 20% of gross domestic product (GDP). Approximately
65% of Australia’s two-way trade occurs with countries in Asia” (Zhou, I. and Satherley, T.
2023), so the disruption with their business with China as the Chinese have placed higher
tariffs on their goods as well as bans on Australian products make Australia less attractive
which isn’t going to be helpful, especially when you also take into consideration the
implication of decarbonisation in a few years. So, whilst Australia thrives in trading today,
make no mistake it is a very necessary win for them as they will need to plan ahead going
forward.
