As expected the Reserve Bank of Australia left interest rates unchanged today at 6.50 percent. The Australian dollar did rally on the back of the release but that was primarily due to much stronger than expected retail sales in August.
Gains were not sustained however as the market later learned that the trade deficit widened more than expected. According to Treasurer Costello, inflation is contained. Even though the Australian economy is still doing far better than the US and Europe, the strength of the Aussie is beginning to have an impact. Service sector PMI is due for release tomorrow. The Canadian dollar could also see a lot of action with building permits and IVEY PMI due for release. Both are expected to improve, but what we will be looking at the employment component of the report most closely because it can be used as a leading indicator for Canadian employment.
[B]Written by Kathy Lien, Chief Currency Startegist for DailyFX.com[/B]