The Aussie ended its losing streak last week! Will we see a back-to-back positive week with these catalysts?
RBA’s meeting minutes (Sept. 18, 1:30 am GMT)
In its last statement the Reserve Bank of Australia (RBA) stuck to its guns and maintained its hawkish bias even though four large Australian banks had raised their own rates out of schedule and could have prompted the RBA to counter it through rate cuts.
Let’s see if the central bank’s optimism has a few caveats. RBA’s meeting minutes releases hasn’t affected the Aussie much since Governor Lowe and his team haven’t changed their biases for a while, but we’ll see if the bulls and bears finally pay attention this time around.
Overall risk sentiment
As mentioned below, the Aussie still takes cues from risk sentiment as well as gold and yuan price action.
This week China is set to ask the World Trade Organization (WTO) to impose sanctions on the U.S. for not fulfilling its anti-dumping penalties.
And then there’s the teeny tiny issue of the U.S. issuing another $200 billion worth of tariffs on Chinese goods despite Washington extending invites to China for another round of trade-related talks last week.
The Donald seems to be set in imposing the next set of tariffs, however, so it would be interesting to see how much traders can react to the eventuality. Don’t even think of missing any related headlines!
Last Week’s Price Review
The Aussie may soon be ending its five-week losing streak since the Aussie is currently in second place (as of 6:00 am GMT).
There’s even a chance that the Aussie may come out on top since the Aussie is currently catching up to the pound.
The Aussie appears to have been taking more directional cues from gold this week.
And evidence of this can be seen on Friday since the Chinese yuan was drifting lower, but gold prices were tilting to the upside. And as you can see in the overlay of AUD pairs, most AUD pairs were moving higher on Friday.
Of course, the Aussie didn’t just take directional cues from gold and the yuan.
The Aussie also rejoiced when the Wall Street Journal released a report claiming that U.S. Treasury Secretary Steven Mnuchin has supposedly invited China to another round of trade talks, according to unnamed “people briefed on the matter.”
Trump’s Chief Economic Adviser Larry Kudlow later implied that the rumor was true during a Fox Business interview. And the rumor was finally confirmed the following day when Chinese Foreign Ministry Spokesperson Geng Shuang acknowledged during a presser that China has received the rumored invitation.
Aside from that positive trade-related development, the Aussie also got a bullish boost when Australia’s jobs report surprised to the upside.
And as a side note, the Aussie did get a rather hard kick when the WTO’s September 21 meeting agenda was released since that revealed that the WTO’s dispute settlement body was scheduled to hear China’s request for permission to impose sanctions on the U.S. for anti-dumping violations, which ramped up trade-related anxiety.
The Aussie also got rushed by sellers on Thursday when the yuan and gold prices fell, apparently as a reaction to this tweet from Trump.
The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?
— Donald J. Trump (@realDonaldTrump) September 13, 2018
Fortunately for the Aussie, the bullish boost from the positive trade-related development and Australia’s jobs report (and the rise in gold prices) were more than enough to push most AUD pairs above last week’s closing prices (dashed, horizontal line).