Reserve Bank of Australia Needs To Weaken AUD: Capital Economics

As the recent slowdown in retail spending growth and residential building activity point to the Australian economy’s greater reliance on the external sector, the Reserve Bank of Australia’s decision to reverse some of the recent strengthening in the Australian dollar is justified, believe analysts at Capital Economics. Paul Dales said in his research report titled “Dollar crucial when domestic demand is slowing” that he believes the recent strengthening in the AUD should support a rise in consumer confidence in April.

Retail spending hardly grew over the past 3 months in Australia

Dales points out that by leaving interest rates on hold at 2% at its April policy meeting, the Reserve Bank of Australia resumed its war of words with the currency markets by expressing its displeasure at...