A surprisingly weak labor market report sank the Aussie across the board last week. Can the RBA break the bears’ momentum?
Here are catalysts that could affect the Aussie’s price action:
RBA’s meeting minutes (Nov 19, 12:30 am GMT)
- Reserve Bank of Australia (RBA) kept its cash rate at 0.75% and supported its confidence that the economy has reached “a gentle turning point” after hitting a soft patch in H2 2018
- The decision, along with U.S.-China trade optimism, boosted AUD higher until the start of London trading
- Watch for clues that the RBA will consider QE especially since Gov. Philip Lowe has a speech entitled “Unconventional Monetary Policy: Some Lessons from Overseas” scheduled next week
Flash manufacturing and services PMIs (Nov 21, 10:00 pm GMT)
- Manufacturing PMI inched lower from 50.3 to 50.1 in October, the lowest in three and a half years. New orders decreased for the first time ever thanks to weak demand
- Markit’s services PMI also weakened from 52.4 to 50.8 for the month. New orders and employment weakened, while business confidence sank to a seven-month low
- AUD dropped to new intraday lows at the release and barely recovered for the rest of the day
- Watch out for even weaker readings that suggest that the economy is hurting from global trade pressures
Market risk appetite
- Other major central banks like the ECB and Fed will publish their meeting minutes this week. Their immediate plans could give clues on the direction of global interest rates
- Markets expect the PBoC to lower its new loan prime rate (LPR) on Wednesday after unexpectedly injecting liquidity last Friday
- With less than a month to go before the December 15 tariffs kick in, all eyes will be on the Trump admin’s willingness to adjust its existing tariffs long enough to lock in a “phase one” deal with China. Markets are cautiously hopeful that a phone call between Liu He, Lighthizer, and Mnuchin over the weekend will lead to more substantial updates
Technical Snapshot
- Trading AUD against GBP, EUR, JPY, and NZD is a good idea if you’re looking for strong price movements
AUD Volatility Profile from MarketMilk™
- AUD/JPY is trading above its 50 SMA but lower against its 200 SMA. AUD/CHF, AUD/CAD, and AUD/USD could also see short-term retracements on their longer-term downtrends
