With all the talk last week about central banks in Europe and Canada preparing to draw up plans for tighter monetary policy investors expected the Reserve Bank of Australia to make similar noises in its statement on Tuesday. Investors were not anticipating an actual increase in the Cash Rate but they were looking for a tilt to the upside in the RBA's rate outlook. They were therefore disappointed when the statement maintained its previously neutral tone.

The economic data from Australia were decent enough, particularly the trade figures for May which showed imports increasing by 1% while exports jumped 9%. The purchasing managers' index readings, which track activity in the private sector, showed it gaining pace in Australia while decelerating in Britain.  Despite that, and largely because of the non-committal RBA, the Aussie had a losing week. It lost more than one US cent and was down by one and three quarter cents against sterling.