The RBA is scheduled on the global stage this week! Will Governor Lowe and his team give something for the Aussie bulls and bears to chew on?
Retail sales and trade balance (Feb 5, 1:30 am GMT)
Australia’s trade surplus narrowed down from 2.01B AUD to 1.93B AUD in November as imports outpaced exports.
Sales of the volatile non-monetary gold rocketed by 60%, which helped exports advance by another 1.0% in November. Meanwhile, imports jumped by 2.0% for the month as purchases of capital goods rose by 7.0%.
Luckily for the bulls, last month’s retail sales data helped turn things around for the Aussie. See, Black Friday shenanigans helped boost retail activity to 0.4% in November, the fastest pace since June 2018.
Can retail sales maintain its growth? Market geeks expect retail activity to stagnate in December though the quarterly reading is expected to print a 0.4% growth after a 0.2% increase in Q3 2018.
Australia’s trade surplus is expected to improve, though. The report could clock in at 2.3B AUD, much wider than November’s 1.9B AUD figure.
While these top-tier events have affected the Aussie’s intraday price action before, keep in mind that the RBA will also publish its monetary policy decision a couple of hours later.
Unless the RBA’s event turns out to be a dud, it’s likely that traders will pay more attention to the central bank’s statement.
RBA’s policy decision (Feb 5, 4:30 am GMT)
As expected, the Reserve Bank of Australia (RBA) kept its interest rates steady at 1.50% for a 28th consecutive month in December.While the central bank is still concerned over the impact of high household debt and low household income on consumption, it’s still optimistic over the economy overall.
This week marks the first time Governor Lowe and his team will share their policy decisions in 2019. Analysts say that, between Australia’s weak GDP prospects, continued softness in inflation, and falling business and consumer sentiment, it would be hard for the RBA to keep its rosy outlook. Heck, it might even drop its “next rate move will be up” rhetoric!
On the other hand, other market players believe that Lowe and his friends won’t switch biases just yet. A more likely scenario is them downgrading their growth and inflation forecasts when they publish their quarterly Statement on Monetary Policy (SoMP) on Friday.
Governor Lowe won’t conduct a presser immediately after the RBA’s statement, but he will address the national Press Club on Wednesday. Don’t even think of missing these potentially market-moving events!
Missed last week’s price action? Read AUD’s price recap for Jan. 28 – Feb. 1!