The RBA this afternoon released its latest update on commodity prices which showed a fall of 2.82% in June when measured in Aussie dollar terms. That brings the fall to 7.29% over the financial year in Aussie dollar terms.
In US dollar terms (in which most commodities are priced) the fall is slightly more at 7.97% and in the arcane language of central bankers the commodity price index is down 9.63% in SDR terms.
However it’s the divergent moves between the Aussie dollar, which is up 1.92% since the end of the June 2013, and commodity price falls which saw the RBA change its language toward the Aussie dollar in today’s statement.
The key for the Aussie dollar and currency traders is that Australia still has comparatively high rates, there is hardly any volatility in markets – so earning these rates is not threatened – and the US, and potentially the European Central Bank are actively trying to get their currency lower.
It seems no matter what the RBA thinks, unless it acts on the Aussie by either cutting rates or selling there is little it can do to make it fall.