A cocktail of factors dragged the Aussie lower last week. Let’s see if this week’s catalysts can recover some of its losses!
Which events should you pay close attention to? Here’s a list:
China’s official PMIs (Jul 31, 2:00 am GMT)
China’s manufacturing and non-manufacturing sectors took more hits in June, as outlook suffered on the back of trade tensions with the U.S.
China’s manufacturing PMI came in at 49.4, lower than the expected 49.5 reading while the non-manufacturing index dipped from 54.3 to 54.2 during the month.
Australia’s exports depend a lot on China’s demand, so the weak releases dragged the Aussie sharply lower after the reports were printed.
This week market geeks see China’s manufacturing PMI improving from 49.4 to 49.6, while the non-manufacturing index is expected to slow down further from 54.2 to 54.0.
Take note that Australia is printing its quarterly CPI report thirty minutes after China’s releases. That means you should consider the possibility of intraday reversals in case China and Australia’s reports paint a different picture for the Australian economy!
Quarterly CPI (Jul 31, 2:30 am GMT)
Back in April we found out that slower growth in petrol and housing prices dragged Australia’s consumer prices down 1.3% from a year ago in Q1 2019.
That’s lower than the 1.8% figure seen in the previous quarter and the 1.5% gain that analysts were expecting. In fact, it’s the lowest consumer price increase since Q3 2016!
Not surprisingly, the weak inflation reading fueled speculations of an RBA rate cut. The Aussie tumbled lower across the board and failed to recover most of its pips for the rest of the week. Yipes!
This week analysts see Australia’s prices printing a 1.5% annualized gain. The quarterly reading, which came in flat last time, is expected to rise by 0.5%.
We know that RBA Chief Philip Lowe isn’t keen on “moving the goalposts” by lowering the central bank’s inflation targets. If Q2’s inflation reading comes in much weaker than expected, then we could see more rate cut calls flood the pip streets as market players put pressure on the RBA to meet its inflation targets.
Retail sales (Aug 2, 2:30 am GMT)
Australia’s retail activity popped up by 0.1% in May, same as in April’s growth but lower than the 0.2% uptick that market players had expected.
Turned out, sales of household goods and cafes, restaurants, and takeaway food services increased but food and other retailing took hits. The Aussie popped higher right after the release, but soon gave up its gains as traders concentrated on other economic catalysts.
This week analysts see retail sales gaining by 0.3% for the month of June. The report marks one of the last from Australia, so a significantly worse or better than expected release could inspire a bit of profit-taking from the Aussie’s intraweek trends.
Then again, the release of Uncle Sam’s NFP report during the U.S. session a few hours later could keep traders on the sidelines during the Asian session.
Missed last week’s price action? Read AUD’s price recap for July 22 – 26!