News from Westpac and RBS hint that Australia might soon follow New Zealand's lead and increase interest rates in the near future. This is due to the increase in property prices being anticipated in Australia, as the low interest rates are finally making an impact in the housing market, especially when it comes to property auctions. When housing prices finally pick up in Australia as it has in New Zealand, the government is expected to raise interest rates to curb the trend.
Aside from the housing market, the Australian government is also expected to increase spending on infrastructure projects at home. This would help soften the impact of the drop in investment in mining and as insurance should the Chinese economy weaken in the future. As with the increase in interest rates, this move is expected to increase the value of the aussie. On the flipside, however, this would naturally increase Australia's debt.
Speaking of the aussie, the currency continued to rise against the weaker greenback due to the continued shutdown of the US government. Earlier today, the AUD/USD pair has already managed to break past the 0.9440 zone, and is currently trading at 0.9445.
Initial resistance for the AUD/USD pair is at 0.9432, followed by 0.9456. Meanwhile, initial support is at 0.9380, followed by 0.9357.
The EUR/USD pair managed to go a notch higher during yesterday's US session, going just above the 1.3640 zone. Today, however, the pair has remained flat, hovering between 1.3620 and 1.3630, mainly due to the lack of significant reports from both sides of the Atlantic save for the EU's PPI data and speeches from Fed members in the US, which would happen later today.
At the moment, the EUR/USD pair is trading at 1.3624, with initial resistance seen at 1.3668, followed by 1.3702. Meanwhile, initial support is at 1.3598, followed by 1.3564.
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