RBA Rate rise pressure!!

Dubai's decision to delay its debt payments dominated the last week. We saw more good economic data released globally but Dubai news led to a big increase in investor risk aversion and sharp falls in most share markets, falls in currencies like the Australian dollar, Euro and a fall in the value of emerging market debts.

In Australia, both construction and capital expenditure data clouded expectations the Reserve bank of Australia would raise interest rates when they meet on Tuesday next week. If they raise rates again on December 1, it will mark the first time the bank has raised rates three times in a row since January 1990. A high interest rate means a higher return on Australian investments and the local unit tends to lift higher on speculation of a rate rise.

Construction figures released by the Australian Bureau of Statistics (ABS) showed total construction work done in Australia rose by a seasonally adjusted 2.2 per cent in the September quarter. However, capex data later in the week showed new private capital expenditure fell by a seasonally adjusted 3.9 per cent in real terms in the September quarter, well below market expectations of a one per cent rise. The worse than expected capex data made for a slightly less hawkish outlook for a rate rise next week, according to analysts.

http://www.moneytrading.com.au/