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Inflation worries for Australia

The latest consumer price index figures rose more than expected in the second quarter. The Aussie Dollar rose to a record high against the US Dollar amid speculation that the Central Bank will be forced to increase interest rates at the next meeting.  The Aussie Dollar started today trading around 1.48 against Sterling.

Gross Domestic Product (GDP) grew in the second quarter by a marginal 0.2% but in-line with market expectation. Whilst a number of issues can be cited the bottom line is the economy is slowing and concern over a double dip recession returns to the market. Sterling continues to struggle against all currencies with the exception of the US Dollar.

The Eurozone debt issue still remains with both Italy and Spain paying a high price on their short-term debt. Spanish borrowing hit a three year high and Italian treasury bills reached the highest since 2008.

The debt ceiling in the USA still remains unresolved as we approach the deadline of 2 August. The US national debt currently runs at US$14.3tn with the deficit for this year alone reaching UD$1.5tn there is now a 50 – 50 chance of them losing their AAA status which would be the first time since 1917.