A lack of top-tier Australian reports kept Aussie in tight ranges last week. Let’s see if this week’s events could push it in one direction!
RBA’s meeting minutes (Oct 15, 12:30 am GMT)
After taking a chill pill for two months, the Reserve Bank of Australia (RBA) made its third interest rate cut for the year and brought its rates to a new record low of 0.75% in October.
Governor Lowe shared that “risks are tilted to the downside” as uncertainty over global trade flows are keeping investments in check. Overall, RBA believed that “an extended period of low interest rates will be required” for the economy to hit the central bank’s targets. Yipes!
This week we’ll know more about RBA’s concerns when it prints its latest meeting minutes. Just how worried are its members over global trade flows and the future of household spending? Are they enough to warrant a FOURTH rate cut for the year?
Labor market numbers (Oct 17, 12:30 am GMT)
The economy added a net of 34,700 jobs in August, higher than the 10,000-addition seen for the month but lower than the downwardly revised 36,400 increase in July.
Details are mixed with the unemployment rate from 5.2% to its 2019 high of 5.3%. Participation rate edged higher from 66.1% to 66.2% and hours worked popped up by 0.2% though.This week analysts see the unemployment rate maintaining its 5.3% growth and participation rate remaining at 66.2%. Only a net of 15,000 jobs are expected to be created, though, so it’s possible that we’ll see some weakness in the labor market.
Recall that the RBA recently shared its concerns that the combo of stagnating unemployment rate and “only modest” increases in disposable income are weighing on household consumer spending.
If this week’s numbers reflect more increases in part-time work rather than full-time jobs, then RBA will have more to worry about in its next policy meeting. But if the economy continues to add more stable jobs than expected, then we could see the Aussie pop up during the Asian session.
China’s top-tier data releases
As China is Australia’s biggest trading partner, the Aussie has a lot at stake in this week’s top-tier data releases.
Later today China’s trade surplus is expected to expand from $34.84B to $36.73B in September as markets expect the decline in imports (-6.0%) to outpace weaknesses in exports (-3.0%).
On Tuesday at 1:30 am GMT consumer prices are expected to heat up from 2.8% to 2.9% from a year ago in September. The same can’t be said of producer prices, though, which could see a 1.1% annualized decrease (faster than August’s 0.8% decline) for the month.
A major data dump is also scheduled on Friday at 2:00 am GMT. The most closely watched is China’s quarterly GDP, which could slow down from 6.2% to 6.1% from a year ago in Q3 2019.
Fixed asset investment, which gives clues on businesses’ long-term economic sentiment, is also expected to weaken from 5.5% to 5.4% in September. Industrial production is seen to expand from 4.4% to 5.0%, however.
Finally, retail sales is expected to print at 7.8%, much stronger than the 7.5% growth seen in August.
These reports could set the tone for risk appetite during the Asian (and maybe even London) trading sessions, so make sure you stick around during the releases!
Missed last week’s price action? Read AUD’s price recap for Oct. 7 – 11!