The RBA is up this week! Will it keep its optimism on the economy? Or will it follow the RBNZ’s footsteps and drag the Aussie lower? Here are the catalysts to watch out for!
RBA statement (Apr 2, 4:30 am GMT)
The Reserve Bank of Australia (RBA) didn’t cause a lot of fireworks last month when it maintained its interest rates at 1.50% as markets had expected.
The central bank also stuck to its upbeat economic assessment, citing rising business investment, increased employment, and higher spending on public infrastructure as reasons why its cash rate could still move higher or lower.
But that was last month. Since then the GDP has shown to be much weaker than many had believed, RBA officials have expressed concerns about the impact of lower housing prices on households’ financial stability, and the RBNZ – a close neighbor of the RBA – has already adopted a dovish stance that could see a rate cut as early as this year.
This week, market geeks expect the central bank to maintain its 1.50% cash rate for another month in April. However, the meat of the announcement will come from any hints of the central bank’s biases in the foreseeable future. Will the RBA finally turn dovish this week?
Retail sales and trade balance (Apr 3, 1:30 am GMT)
What’s better than a top-tier release? TWO top-tier reports!
In last month’s reports we saw Australia’s retail sales rise by 0.1% for the month of January, which was better than the 0.4% decline in December but missed analysts’ expectations of a 0.3% uptick.
Fortunately, Australia’s trade numbers saved the day. Its trade balance showed a 4.55B AUD surplus in January, higher than the upwardly revised 3.77B AUD surplus seen in December. Turned out, the 5.0% jump in exports contributed to the report printing its second largest trade surplus on record. Woot!
This week market players are looking for a 0.3% bump in retail sales for the month of February. Meanwhile, the trade surplus is expected to cool down to 3.7B AUD for the month.
Unless China’s Caixin services PMI (scheduled an hour or so after Australia’s data) gets a lot more attention that it usually does, the retail and trade balance reports could dictate the Aussie’s price action until the next trading session.
Market risk sentiment
We already know from last week’s trading that Aussie bulls and bears look at global risk sentiment for directional cues.
Over the next couple of days, we’ll see some of the euro zone’s PMIs, which could sub as global growth markers for some traders. Britain will also keep calm (?) and carry on with its Brexit negotiations where PM May is under pressure to present a “soft Brexit” deal.
And then there’s Uncle Sam’s NFP report, which will be closely watched now that more traders are worrying about slowing growth in the U.S.
Any of these catalysts could affect the Aussie’s intraweek trends, so y’all better make sure you’re around to trade these releases!
Missed last week’s price action? Read AUD’s price recap for March 25 – 29!