Last week’s Australian reports helped extend or break risk-related trends. Will this week’s scheduled reports boost or drag the Aussie?
Lowe’s speech (June 13, 2:00 am GMT)
On Wednesday the Reserve Bank of Australia (RBA) Governor will be giving a speech titled “Productivity, Wages, and Prosperity” in Melbourne and audience questions are expected.
Then again, we’ve already heard from the central bank last week and markets weren’t really impressed. After all, we already know that the central bank thinks rates will likely go higher than lower, but that there isn’t much pressure to make them raise their rates anyway.
Let’s see if Lowe’s presser can give the Aussie a bump during the event!
Employment numbers (June 14, 1:30 am GMT)
Last month’s release turned out to be supportive of the Aussie as we saw higher labour force participation rate and more full-time jobs offsetting losses in part-time employment.
This week market geeks are betting on Australia adding a net of 19,200 jobs in May, a tad lower than the 22,600 we saw back in April. The unemployment rate, on the other hand, is expected to maintain its 5.6% reading.
If the report prints significant misses, then we might see more losses for the Aussie. But if we see more improvement in the labour market, then the report will support the RBA’s optimism and maybe put on more pressure for the central bank to make good on its plans to eventually raise its rates.
Other potential catalysts
Aside from Australia’s jobs data, markets may also react to Trump pulling the U.S. out of the G7 communique that addresses issues such as jobs, climate change, gender equality, and investing in growth “that works for everyone.”
And then there’s the U.S.-North Korea nuclear summit happening in Singapore this week. Word around the hood is that Trump is planning on winging the meeting instead of getting hoardes of people with a bunch of papers with him.
An unscripted meeting between two of the most headstrong leaders? What could go wrong, amirite?
Meanwhile the Fed, ECB, and BOJ are scheduled to share their monetary policy decisions this week. The Fed is widely expected to raise its interest rates; the ECB might finally hint at tapering its easy policies, and the BOJ could cry uncle and set more realistic inflation expectations. Exciting times!
Last Week’s Price Review
The Aussie finished mixed but a net winner last week. And this week, it’s currently mixed yet again (as of 6:00 am GMT). The Aussie is on the losing side, though, so five consecutive weeks of net wins for the Aussie may finally end this week.
Like last week, AUD pairs didn’t really seem to track gold prices very closely this week. In fact, the Aussie’s price action sometimes diverged from gold prices.
The Aussie then fired its booster rockets when Australia’s April retail sales report printed a stronger-than-expected reading (0.4% vs.0.3% expected, 0.0 previous).
After that, the higher-yielding Aussie extended its gains as risk-taking prevailed during Monday’s morning London session, with easing political uncertainty in Italy being cited as the reason for the risk-on vibes.
The Aussie’s rally finally began to stall during the U.S. session, likely because traders were hunkering down and/or taking some profits off the table ahead of the RBA statement. Greenback strength may have also helped to weaken the Aussie, though.
At any rate, most AUD pairs later began tilting to the downside when Tuesday rolled around, very likely because risk-taking began to abate during the Asian session.
And when the RBA finally delivered its monetary policy statement, the Aussie barely reacted to the event, very likely because the RBA didn’t really offer any surprises.
Risk appetite got revived during Tuesday’s morning London session. However, all the comdolls got slapped lower, likely because of retreating commodity prices at the time.
Risk appetite persisted into Tuesday’s U.S. session, though. And that, as well as rising gold prices, likely helped to eventually stop the Aussie’s slide.
Risk-taking was still the name of the game when Wednesday’s Asian session rolled around. Also, Australia’s GDP Q1 report surprised to the upside (1.0% vs. 0.9% expected, 0.5% previous), so the Aussie shot higher as a result.
That was apparently the Aussie’s last hurrah, though, since appetite for risk began to fade during Wednesday’s London session, which is likely why the Aussie’s rally also began to lose steam.
Worse, risk sentiment turned sour and Australia’s trade report failed to meet expectations ($0.98B vs. $1.00B expected, $1.73B previous) on Thursday, so the Aussie got kicked lower.