The RBA is up this week! Will Lowe and his team share another bearish bombshell for the Aussie?
Here’s a list of the catalysts you need to watch out for:
RBA’s statement (Mar 5, 3:30 am GMT)
As expected, the Reserve Bank of Australia (RBA) kept its interest rates unchanged for another month in February.
What traders didn’t expect was that Governor Lowe would hint that rate cuts were not a possibility. Not only that, but a few days later we also learned that they cut key economic forecasts and are concerned enough over house price falls in Sydney and Melbourne.
This week analysts expect the RBA to maintain its interest rates at 1.50% as it has been doing since August 2016. This means that the action will likely come from the rest of the statement, which could show the extent of the central bank’s economic concerns.
Specifically, traders will be looking to see if the central bank is more worried about the house price falls’ impact on consumer spending. They could also talk about Australia’s banks, which are tightening their purses to consumers amidst threats of Australia having weaker trade activities with China.
If the statement itself doesn’t provide a clear picture, then Lowe’s speech scheduled later in the day (at 10:10 pm GMT) could provide more insight and maybe more volatility for the Aussie.
Quarterly GDP (Mar 6, 12:30 am GMT)
Australia’s economy grew by 2.8% from a year ago in Q3 2018, which marks the weakest reading since Q4 2017. And if that’s not enough to spook investors, Q2 2018’s growth was also downwardly revised from 3.4% to 3.1%.
A closer look tells us that final consumption expenditure was the biggest contributor, while net trade made NO contributions and non-dwelling construction actually dragged on the economy. Not surprisingly, the weak numbers dragged the Aussie lower across the board for the rest of the week.
This week, analysts expect to see the quarterly GDP tick higher from 0.3% to 0.4% in Q4 2018. Analysts aren’t as optimistic with the annualized figure, as they expect a 2.6% growth after seeing a 2.8% uptick.
If this week’s release prints downside surprises, then the Aussie could see another trip down the charts. But if analysts were proven too pessimistic this time around, then the comdoll could recoup some of the pips it had lost last week.
Don’t even think of missing this release!
Retail sales and trade balance (Mar 7, 12:30 am GMT)
RBA and GDP events still not enough for ya? You might want to trade this one!
Australia’s retail sales activity surprisingly contracted in December, as numbers confirmed that consumer demand, confidence, and spending are taking hits. The trade balance report wasn’t as bad, though, as a drop in imports caused the trade surplus to widen sharply for the month.
The Aussie ended up falling against its major counterparts and didn’t come up for air until the RBA later printed its monthly policy statement.
This week, market geeks expect to see retail activity gain 0.3% in January after contracting by 0.4% in December. Meanwhile, they also see the country’s trade surplus narrow down from a surplus of 3.6B AUD to 2.9B AUD in January.
There are no other major economic events scheduled around this time, so it’s likely that significant hits or misses in the reports could dictate the Aussie’s intraday price action until the next trading session.
Chinese trade balance (Mar 8, Asian session)
We already know from last week’s price action that, because China is one of Australia’s biggest export markets, traders tend to pay attention to major Chinese data releases.
Well, it can’t get any more major than this week’s trade balance data! Analysts expect to see China’s trade surplus narrow down from $39.2B to $27.2B in February, with exports dipping by 2.2% (from a 9.1% annualized growth) while imports are expected to edge 1.3% higher from a 1.5% dip in January.
If last week’s reaction was any indication, then we can expect the Aussie’s price action to directly correlate with China’s data. That is, a wider surplus would be good for the Aussie, while a tighter read would translate to some losses for the comdoll.
Missed last week’s price action? Read AUD’s price recap for Feb. 25 – Mar. 1!