percent: Since the end of June, JPMorgan Chase & Co. real effective exchange rate for the Aussie has risen 4 percent, while Westpac Banking Corp, according to Bloomberg. Australian export commodity index has soared by 43 percent. Now theyre conspicuously quiet as it fails to keep pace with resurgent resource prices. The mismatch is another reason why central bank Governor Philip Lowe is comfortable sitting on his hands he getting an easing of financial conditions without having to touch the monetary policy lever. Given how important the whole terms of trade dynamic has been for the economy and the currency, it makes sense for the RBA just to watch and wait. Indeed, money markets now see little chance the Reserve Bank of Australia will cut interest rates from the current record-low 1.5 percent next year; in fact theyre pricing in some possibility of a hike in November and December. function global function ad Code markets/article dimensions id 1 0 2 1 10 strategy targeting targeting Modifiers ; ; window ; Normally, it a drop in the currency that gives a bit more stimulus to the economy; but in this case it has gone up -- just by not as much as commodity prices -- and that delivering the boost, said Sally Auld, head of fixed-income and currency strategy for Australia at JPMorgan.
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