Another week, another chance to short the Aussie? Here are catalysts that might turn things around for the comdoll!
RBA’s meeting minutes (May 21, 2:30 am GMT)
In its policy decision printed earlier a few days ago, the Reserve Bank of Australia (RBA) kept its interest rates at 1.50% for another month in May.
In its statement RBA Governor Lowe and his team emphasized Australia’s labour market, saying that further improvement is “needed for inflation to be consistent with the target.”
Since there was no clear consensus on market expectations at the time, the RBA’s decision to hold off any rate changes – despite weaknesses in a couple of key economic indicators – was a welcome surprise for the bulls.
Unfortunately, the move only lasted until later in the day when U.S.-China trade war concerns had come back to haunt the comdoll.
This week we might get hints on just how close the RBA came to cutting its rates. Specifically, watch out for clues on how concerned the central bank is over labour market trends and their impact on consumer spending and inflation.
Trade war updates
In case you were too busy organizing your Game of Thrones finale viewing parties, you should know that trade war hostilities between the U.S. and China have now gone beyond T̶h̶e̶ ̶W̶a̶l̶l̶ imposing crippling tariffs on each others’ products.
Last week we learned that the U.S. put company Huawei on its “Entity List,” which basically makes it harder for ANY U.S. company to do business with the Chinese tech giant.
Google also reportedly said “zàijiàn” to Huawei last weekend and suspended any business that “requires the transfer of hardware, software and technical services except those publicly available via open source licensing.” That means future Huawei phone owners could lose access to services such as Google’s Play Store and Gmail apps. Yeouch!
How will China react to the pressure? Word around is that trade talks have now hit a pause. Unless we hear about more meetings scheduled between the U.S. and Chinese trade reps, then we probably won’t see any de-escalating until Trump and Xi Jinping meet in the G20 meeting next month.
Missed last week’s price action? Read AUD’s price recap for (May 13 – 17)!