As a broad summary, the conclusion I would draw from these figures is that while Australia is very much linked into Asia (and particularly China) in respect of trade flows, in terms of investment flows it is mainly linked to the United Kingdom and the United States. 3. What does this mean for the Australian economy and Australian markets?
In such a world, the monetary authority will seek to satisfy the expectations of financial markets – in the extreme case: whatever they are – by never surprising them. If the monetary authority does not do what is expected the financial markets will ‘punish’ it – for example by demanding higher risk premia to cover the greater uncertainty.