It was a week of net positive economic updates from Australia, but Aussie bulls couldn’t withstand the surprise announcement of the U.S. imposing more tariffs on Chinese goods that sent the markets into risk-off mode.
Australia Headlines and Economic data
- New home sales rise for the first time since 2017
- Despite the positive signal from the housing sector, the Aussie drifted lower on the Monday session, possibly on news that China’s industrial profits fall 3.1 per cent in June as fears of trade war slowdown grow
- Australia inflation ticks up in Q2, rate cut still in play – the 0.6% quarterly read was better than an expected rise of 0.5%, and this was likely the catalyst for a small broad move higher, likely hindered by the following weak data updates from both Australia and China
- Australia private sector credit slows to 0.1% in June vs. 0.3% in May
- China July factory activity shrinks for 3rd month
- China’s service sector activity grows at slower pace in July
- Australia’s import prices increased by 0.9% q/q in June 2019, missing market consensus of a 1.8% rise
- Australia AIG Manufacturing index rises to 51.3 vs 49.4 in June
- Trump announces new tariffs on $300 billion in Chinese goods – this event set global financial markets into fear and uncertainty mode as traders were caught off guard given the earlier rhetoric in the week was that U.S.-China negotiations were ‘constructive.’ The Aussie moved broadly lower on both risk-off flows and the likely economic damage this would do to its close trading partner, China.