The Reserve Bank of Australia is expected to cut rates by 0.25% in the first quarter of the year, it resumes its monthly meetings in February. Today’s TD Securities – Melbourne Institute inflation numbers show a rise of 0.4% in December compared to November when it fell by 0.1%. The annual pace of inflation at 2.4% is still well within the Reserve Bank’s 2-3% target range, which complicates things further. Job vacancies continue to point to weakness while lending also disappointed slightly on the downside today.
In terms of jobs, the unofficial ANZ job survey showed advertisements fell by 3.8% in December after a 2.8% decline in November. Advertisements are now 20% below their February 2012 levels and around 50% below levels leading into the 2009 financial crisis. Either job creation is slowly coming to a halt or the advertisement numbers need their methodology reviewed. We’ll get a better idea on Thursday when official unemployment numbers are released – consensus expecting the pace of unemployment to move from 5.2% to 5.4%.
In the meantime, the AUD continues to maintain solid upward levels against the USD, last trading at US$1.0556. The AUD against the JPY also remains all one way traffic, last at 94.50 which is an almost unthinkable number given the extent of the appreciation since the beginning of December.