The Aussie followed gold’s footsteps for most of last week. Will it have a chance to set its own tune this week? Let’s take a look at the potential catalysts.
RBA’s meeting minutes
Market players mostly shrugged off the Reserve Bank of Australia (RBA’s) statement earlier this month. As expected, the central bank remained positive about the economy’s growth (thanks to exports!) even as members worried about inflation and household consumption.
Will the meeting minutes provide enough bombshells to bring the bulls and/or bears out? China will print mid-tier reports incTluding retail sales, fixed asset investment, and industrial production numbers shortly after the meeting minutes report, so make sure you stick around to see if they will dictate the Aussie’s price action instead!
April jobs numbers
Last month’s jobs report printed weak numbers across the board. Aside from a miss in net jobs gained, full-time workers had lost their jobs while part-time employment increased. Luckily for Aussie bulls, market players were too focused on waning geopolitical risks to price in the report.
On Mau 17 at 1:30 am GMT market geeks expect Australia to maintain its 5.5% unemployment rate. However, they also expect a net 20,300 workers to have found jobs in April, which is stronger than last month’s 4,900 increase.
Pay attention to details such as where the job gains came from in case they make a difference for the bulls and bears on Thursday!
Overall risk sentiment
As mentioned below, the Aussie moved in tandem with gold prices several times last week and, yes, it had something to do with overall risk sentiment and even U.S. dollar demand.
This week pay close attention to how the markets react to any developments regarding Iran’s nuclear deal as well as any (positive?) news about the upcoming meeting between Donald Trump and Kim Jong Un. Watch out for any headlines that could mean increased geopolitical conflicts!
Last Week’s Price Review
Like last week, the Aussie is turning in another mixed performance this week (as of 6:00 am GMT). And also like last week, the Aussie wasn’t just being pushed around by its peers since AUD pairs had roughly uniform, two-way price action this week.
The Aussie initially weakened from Monday until the first half of Wednesday before staging a broad-based recovery during the later half of Wednesday that is still going strong as of Friday.
And as usual, we can see that AUD pairs were taking directional cues from gold prices. However, we can also see that gold only tumbled a bit during the first half of the week while the Aussie took hard hits across the board, especially on Tuesday.
Australia’s retail sales report disappointed at the time and the Aussie got slapped lower as a result. However, the likely reason why the higher-yielding Aussie was rather weak on Tuesday was the risk-off vibes and Greenback strength at the time.
Risk sentiment also explains why the Aussie continued to take hits during Tuesday’s U.S. session even as gold prices rose since the rise in gold prices was due to Trump’s announcement that he was leaving the Iran Deal, but the announcement also caused risk aversion to intensify at the time.
Anyhow, the Aussie finally found support on Wednesday as gold prices firmed due to faltering Greenback strength began, which market analysts attributed to profit-taking.