The Aussie was a net loser on the week as traders leaned more on the dovish headlines and analysis for Australia and China, brushing off the early week positive developments in the U.S.-China trade front.
Australian Headlines and Economic data
- Relatively strong start to the week for the Aussie, which was likely on positive global risk sentiment. Trader’s seemed to be in risk taking mode early on positive U.S.-China trade headlines (China to raise penalties on IP theft in trade war compromise and China and U.S. ‘very close’ to phase one trade deal). But that sentiment never really ran away as negative headlines like China central bank warns high financial risks amid rising economic headwinds and No ‘phase two’ U.S.-China deal on the horizon came online to take a little bit of air out of risk-on sentiment.
- RBA Deputy Gov. Debelle: Significant pay raises unlikely in near future
- Interest rates to stay low but unlikely to go ‘negative’ says RBA boss Philip Lowe
- Reserve Bank may create money to boost economy when rates drop to 0.25%
- Construction work done in Australia eased by 0.4% in the September quarter
- More pressure for the Aussie on the session, likely on a combination of negative analysis (Australia central bank seen cutting rates twice, introducing QE in 2020: Westpac, Australia’s Growth to Remain Sub-Trend, RBC’s Ong Says) and Chinese data (China’s industrial profits post steepest fall in eight months)
- Australia’s quarterly private capex down 0.2% vs. projected flat reading
- Big geopolitical headlines came out during the Asia session (Trump signs Hong Kong bills; Beijing vows retaliation), which added only a bit more pressure on the Aussie as the damage from that story may have been fully priced in by that point.
- Australian credit growth slows in October: RBA
- Strong risk-off sentiment to close the week and push the Aussie lower after China threatens to take ‘strong counter-measures’ against US after Hong Kong bill signings