Aussie Dollar and Housing Market in Focus in RBA Statement

Marcus Jacob
16 Sep, 2014
New York City

Reserve Bank of Australia held out for possibility of weakening Aussie dollar and noted home prices remain elevated and appear to be driven by speculative demand. AngloGold Ashanti dropped its plan for splitting the company. Iron ore price rebounded 4% after a month long decline.

[R]5:00 PM Sydney, Australia – Reserve Bank of Australia held out for possibility of weakening Aussie dollar and noted home prices remain elevated and appear to be driven by speculative demand. AngloGold Ashanti dropped its plan for splitting the company. Iron ore price rebounded 4% after a month long decline.[/R]

Australian market indexes closed lower despite a 4% rebound in iron ore price. The latest RBA statement focused on the housing market and value of Aussie dollar.

Reserve Bank of Australia focused on sustained surge in home prices across the nation but stopped from labelling the price increase a bubble. However, the central bank noted that the current price increase seems to be driven by speculative demand.

RBA statement for the latest policy meeting also noted that the Aussie dollar remains overvalued but failed to outline any plans to weaken the currency and traders held out for a possibility of 85 U.S. cents to a dollar price level.

Australian dollar traded at 90.02 U.S. cents and in stock trading turnover gained to 772 million shares worth $5.14 billion.

ASX 200 index fell 28.10 or 0.5% to 5,445.40 and the broader All Ordinaries index slid 29.20 to 5,446.20.

Stocks in Review

AngloGold Ashanti Limited surged 7.6% to $3.10 and the gold mining company cancelled its plan for not to proceed with the $2.5 billion demerger.

The gold producer dropped to split its international assets into a new company and evaluate the available options to reduce the debt and consider the feedbacks from the investors.

Leighton Holding Limited slipped 1.1% to $20.70 after the engineering construction company’s subsidiary John Holland Construction a won contract to build a new Ravenhall prison in Melbourne. The project is expected to generate $650 million in revenues.

UGL Limited jumped 2.3% to $6.34 after the diversified service provider in a consortium secured an operations contract worth $3.7 billion to deliver country''s biggest public transport project, North West Rail Link in Sydney.