With economic forecasts improving and monetary and fiscal policy tightening in other industrialized nations, the Australian dollar may be losing some of its advantage in the FX market. Early in the Asian session, the RBA released its bi-annual Financial Stability Review.
Traders are chomping at the bit for rate hikes from the strongest economy amongst the majors; but the policy authority merely stated that the nation’s “financial system has remained resilient.” If Governor Stevens and his policy officials can’t turn this optimistic outlook into tangible returns for currency traders, it may mean little as the rest of the world catches up in the global recovery.