Release Explanation: This is a bi-annual statement that the Reserve Bank of Australia releases. The report provides an assessment of the current condition of the Australian financial system. It outlines potential risks to the stability of the country as well as adjustments to be made.

Trade Desk Thoughts: The Reserve Bank of Australia’s Financial Stability Review revealed a number of key points:

  • The global financial system has continued to experience significant stress while confidence in the worlds largest companies has been weakened.
  • Risk had been underpriced, and when fair value was found it resulted in significant declines.
  • Public sector support (i.e. bailouts) have provided support to many major markets and have helped to stabilize the money markets.
  • However, investors still remain cautious of the underlying balance sheet strength.
  • The problems seen in the financial markets need to be addressed in order to have a sustained recovery.
  • The Australian economy has performed well over the recent times as banks continue to provide solid profits as well as having high credit ratings

Forex Technical Reaction: The yen has not had much of a reaction to this release. The pair was rejected from the .7000 level and is again finding support at the neutral pivot point.