Nervous Australian home owners await Reserve Bank mortgage rate decision.

Shortly after breakfast on Wednesday April 4th, the Reserve Bank governor of Australia will 'hand down his sentence' to the more than five million Australian home-owners with mortgages, many of whom have unwittingly contributed to the massive surge in building approvals this year.

While it was beyond all market expectations that Australian retail sales would skyrocket past previous long-held benchmarks, the 10.60% jump in new home building approvals for the month of February "blew the market away!"

As for greedy little apartment investors; they single-handedly contributed to an incredible 31.5% increase in building approvals!

So, what effect did all this unexpected excitement have on the Australian dollar?……

"Rather considerable", would be my politically correct answer to that question.

At end of business on Monday April 2nd, the Australian dollar had been propelled to decade highs above US81.3 as the market priced a greater risk of a rate increase from the RBA this week.

If the futures markets are anything to go by - and they usually are - there's a greater than 50/50 chance of a 25 basis point move in the official cash rate on Wednesday. And if rates do rise to 6.50%, this will amount to the highest they've been in more than 11 years!

It's been bad enough for Aussie home owners these past twelve months, with RBA increases occurring on no less than three occasions. Those increases alone put a heavy burden on Australia's highly leveraged households. Yet, despite all this unwanted pain, strong employment growth and a jobless rate nudging 30 year lows of 4.60% supported incomes and gave consumers the balls to shop til they dropped!

Come Wednesday morning's RBA announcement, I'm willing to bet the only thing 'dropping' in Australian living rooms will be jaws and tv remotes!

"Sleep tight, my little Aussie bleeders."