The Aussie tracked gold prices and risk sentiment last week. Will the same themes move the comdoll this week?
Here are catalysts you can watch out for:
Lower-tier economic reports
Australia won’t be printing top-tier economic data, but you could watch out for lower-tier releases that could cause a wiggle or two for the comdoll.
The NAB business confidence report will be out on July 10 at 2:30 am GMT. Remember that it dropped from 11 to 6 in May while business conditions also eased from April’s historical highs. Analysts remain optimistic, as leading indicators remain at “solid” levels.
Next up are the Westpac consumer confidence sentiment and home loans releases scheduled one hour apart starting 1:30 am GMT on July 11. Melbourne Institute’s inflation expectations on July 12 at 2:00 am GMT is the last of the bunch, but that doesn’t mean the party will stop for the bulls and bears!
As you can see below, the Aussie took cues from gold prices and overall risk sentiment.
Now that we’ve started another trading quarter and the U.S. has finally pulled the trigger on its first batch of additional tariffs on Chinese goods, some investors and traders will make adjustments to their positions depending on what they think will happen next.
Will China’s retaliate enough to heat up the trade war? Will the U.S. go easier on its other trading partners? How will the trade war affect other asset prices?
Stay glued to the tube for market-related headlines!
Last Week’s Price Review
The Aussie is having yet another bad run since it’s currently mixed but a net loser for the week (as of 6:00 am GMT).
The week is not yet over and the Aussie’s losses against some of its peers are rather small, so there’s still a chance for the Aussie to improve its ranking. But if it fails to do so, then that would mean the fifth consecutive week of net losses for the Aussie.
Looking at the overlay of AUD pairs and gold above, it’s quite clear that AUD pairs were taking directional cues from gold prices again, taking a dive when gold prices slumped on Monday, and then charging higher when gold prices surged on Tuesday, before trading roughly sideways when gold also began to trade somewhat sideways starting on Wednesday.
As usual, risk sentiment also had an effect on the Aussie’s price action, such as when the Aussie climbed higher ahead of gold prices during Thursday’s London session, likely because of the risk-on vibes at the time.
Tuesday is also another example since the Aussie slipped during the U.S. session, even though gold prices continued to climb higher before eventually stalling. And that’s likely because risk aversion was the dominant sentiment at the time.
Trade-related jitters likely weighed down on the Aussie as well, thanks to news that Chinese courts banned Micron Technology’s (an American company) chip sales, which was interpreted by markets as a retaliatory measure against Trump’s tariffs.
As a side note, the RBA announced its latest monetary policy decision on Tuesday, but as marked on the chart above, the RBA statement appears to be a dud since the RBA didn’t really say anything new.
Well, there was actually something new in that the RBA no longer warned about a stronger Aussie like it used to, since the RBA omitted the following from its statement:
“An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”
Perhaps that omission attracted follow-through buyers, but it’s not really clear since gold began climbing higher around that time.