As expected last Tuesday the RBA kept the cash rate unchanged and said the current monetary policy was appropriate. The Australian employment rose by 25.400 in April, above expectations of a 10.000 increase.

Unless we see a large scale unwinding in carry trades and prolonged risk aversion as a result of the sub-prime fall out. The outlook for the AUD is healthy with the high yielding currency expected to gain ground against the pound,

Aussie rates are expected to remain on hold this year verses expected cuts in the UK. The BoE are next meeting in June to discuss cutting interest rates. We expect the AUD to stay range bound between 2.05 and 2.10.