The Australian Dollar is performing well on the news of banks being prepared for stress tests by increases in the cash reserve requirements.
Westpac was the first to jump the gun increasing borrowing rates by 20 basis points and deposit rates by 25 basis points.
Westpac is forcing the RBA to act as economists realise that this applies pressures on the RBA to further decrease interest rates in the near future to encourage GDP to remain within guidance and the economy ticking away.
Whilst we believe currently that the RBA will continue to decrease rates for the purpose of driving the economy for export and tourism – other worrying numbers in the US make a rate rise there unlikely hence giving strength to all major currencies since the beginning of the week.
The markets are volatile and we are awaiting a definitive actions and numbers until we trade as currently the lack of volume and guidance makes the markets less than predictable.