The RBA is up this week! What are traders expecting from the central bank? More importantly, how might the Aussie react?
Here’s a list of potential Aussie price action catalysts this week:
RBA’s statement (Oct. 1, 4:30 am GMT)
The biggest story for the Aussie is the expectation that the Reserve Bank of Australia (RBA) will cut its interest rates by 25 basis points to 0.75% this week.
Just last week Governor Lowe had shared that “further monetary easing may well be required,” as “shifts in global interest rates” pose exchange rate risks that could threaten Australia’s economy that’s seeing a “gentle turning point.”
With a rate cut all but announced, look out for signs that RBA members are still considering further easing this year. A dovish cut could rain on the Aussie’s parade, while hints of stepping back for a while could boost the comdoll against its lower-yielding counterparts.
Trade balance (Oct 3, 1:30 am GMT)
Australia’s trade surplus clocked in at 7.27B AUD in July, softer than the 7.98B AUD surplus seen in June and the 7.4B AUD figure that analysts had expected.
A closer look told us that imports had grown by 3% over the month, while exports only increased by 1% during the same time period.
Luckily for Aussie bulls, China had also announced its intention to meet with U.S. trade negotiators in October. Not surprisingly, this sparked a risk-on vibe for the Aussie.
This week analysts see the trade surplus narrowing down further to 6.0B AUD in August. With no other major data scheduled during the release, look out for pronounced reactions to upside or downside surprises!
Retail sales (Oct 4, 1:30 am GMT)Retail activity slowed down by 0.1% in July, weaker than the 0.4% uptick we saw in June and the 0.2% increase that markets had expected.
Fortunately for Aussie bulls, the RBA had also printed its decision to keep its rates steady just hours after the retail sales release. Those who had expected a rate cut lightened up their short Aussie bets and pushed the comdoll to new intraday highs.
This week analysts expect a rebound to the tune of 0.5% for the month of August.
Take note, however, that Asian session trading ahead of the U.S. NFP report tends to see tight ranges. You might want to consider short intraday trades if you don’t want to trade Uncle Sam’s closely-watched release.
Missed last week’s price action? Read AUD’s price recap for September 23 – 27!