RBA Governor Jawboning the AUD Lower

* Markets should prepare for the “tapering” shift by the US Fed in coming months.

* The US economy is recovering and China’s growth is robust while the EU faces a weak, uneven and fragile recovery.

* Sentiment has lifted in the Australian economy but uncertainty prevails over the transition to higher activity.

* Rising house prices are part of the “normal cyclical dynamic” which should help lift construction.

* The AUD’s current level is not supported by Australia’s relative levels of costs and productivity.

Today’s remarks by the RBA Governor, Glenn Stevens, were delivered at the opening of an investor conference in Sydney. From our reading there was nothing new in the Governor’s remarks concerning the RBA’s view of the world and local economies. But they are worth noting because of some recent commentary around Australia’s housing market and the level of the AUD. His broad theme on the international economy was that conditions are better, for Australia’s trading partners in particular, than thought possible a year ago.