Improved market sentiment saved the Aussie from the pits last week. Can this week’s catalysts extend its gains?
China’s data dump (Monday, Asian session)
Later today the world’s second-largest economy is slated to print top-tier data such as its Q2 2019 GDP and June’s fixed asset investment, industrial production, retail sales, AND unemployment rate.
While all of these reports will be closely watched, the GDP data will likely take center stage. See, markets see China’s growth slipping to its slowest since 2009 thanks to the impact of ongoing trade tensions against the U.S.
Australia sells a lot of its exports to China, so y’all better be prepared for signs of lower demand from its biggest trading partner, alright?
If China churns out stronger-than-expected numbers today, then we could see the Aussie extend its gains across the board.
RBA’s meeting minutes (Jul 16, 2:30 am GMT)
Earlier this month the Reserve Bank of Australia (RBA) decided to cut its rates to a fresh low of 1.00%.
Fortunately for the hawks, RBA head honcho Philip Lowe also hinted that they’re taking a chill pill on any more cuts even as they stand ready to make another one.
The rate cut was widely expected at the time, so traders had focused on pricing in Lowe’s surprisingly not-so-dovish remarks.
We’ll know more about the factors that tilted the odds in favor of a rate cut when we see the meeting minutes this week.
Keep your eyes peeled for the economic elements that the RBA is watching, as they will most likely factor in the RBA’s policies for the rest of the year.
Labor market data (Jul 18, 2:30 am GMT)
Australia added a net of 42,300 in May, much higher than the 17,500 that many had expected and close to the upwardly revised 43,100 that we saw in April.
A closer look told us that full-time jobs inched higher by 2,400, while part-time employment jumped by a nice 39,800.
Meanwhile, the unemployment rate stayed steady at 5.2% even as the participation rate improved by 0.1% to a record high of 66.0%.
Unfortunately for Aussie bulls, traders weren’t too happy that the unemployment rate remained steady despite all the jobs added. Most of them took the report as confirmation that the RBA is worried enough about the labor market that it would cut rates in July (it did).
This week market players see a net of 9,000 jobs added in June even as the unemployment rate remains at 5.2%.
Based on the previous release, weaknesses in the jobless rate and wage growth could inspire Aussie bears to attack. Make sure you don’t miss the event!
Missed last week’s price action? Read AUD’s price recap for July 8 – 12!