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The latest RBA interest rate & monetary policy decision had Aussie bulls running for the hills early week, but the damage was limited as they managed to crawl back from post rate cut pressure thanks to positive trade war rhetoric and late week positive economic updates from Australia.

Australia Headlines and Economic data
Monday:
Tuesday:
- The AIG Australian Performance of Manufacturing Index improved by 1.6 points to 54.7 points in September (seasonally adjusted)
- Australian building approvals fell -1.1% in August
- RBA governor Philip Lowe says further interest rate cuts inevitable as he calls for government action
- Preliminary estimates for Commodity prices in Sept. indicate that the index decreased by 2.7% after decreasing by 4.6% in Aug. (revised)
- Global risk aversion also kicked into high gear, likely putting additional pressure on the Aussie on a combination of rising risks from the global manufacturing sector, especially in the Asian region (Operating conditions at ASEAN manufacturing firms deteriorated for the fourth consecutive month in September). This was capped off during the U.S. trading session after a much weaker-than-expected U.S. manufacturing sentiment report (US manufacturing contracts to worst level in a decade).
Wednesday:
- Another round of risk aversion sentiment hits the markets during the Wednesday session, likely on a combination of U.S. geopolitical risks (Trump impeachment probe gains steam with briefing, depositions) and Asian geopolitical risk (North Korean projectile lands in Japan’s exclusive economic zone, Tokyo says), and new trade war risks (US to impose tariffs on EU aircraft and agricultural products) on top of the global growth slowdown fears from earlier in the week. This was short-lived though as it was likely the downward move in the Aussie was overdone and Aussie traders formed a bottom by the start of the U.S. trading session.
Thursday:
- In seasonally adjusted terms, the balance on goods and services in Australia was a surplus of $5.9B in August 2019, a decrease of $1.3B on the surplus in July 2019
- We saw a broad move higher in the Aussie against the majors during the Thursday trading session, arguably on positive sentiment coming from the U.S.-China trade negotiation story after Trump says a Chinese delegation is coming to U.S. next week for trade talks, as well as speculation that the weak global manufacturing data may be enough to spark further rate cuts from the Federal Reserve.
Friday:
- After Cutting Rates, RBA Tells Banks Not to Be Overly Cautious
- Sydney and Melbourne house prices have soared again, as the Australian property market surges by the most in two and a half years
- Australian housing a key source of potential ‘systemic risk’: RBA
- Australia Aug retail sales rise, suggesting recent rates buoying consumption
- Besides the net positive economic updates from Australia, it’s likely the Aussie saw some support from broad global risk-on sentiment, especially after the net positive U.S. employment report (unemployment ticks lower to 3.5%, August job adds revised higher) quelled some of the fears sparked by weak manufacturing sentiment earlier in the week.