Australia Markets closed

The RBA Minutes Support the AUD on another Quiet Day on the Calendar

Bob Mason

Earlier in the Day:

It a particularly quiet Asian session on the economic calendar through this morning.

There were no material stats to provide direction through the early part of the day.

On the monetary policy front, the RBA meeting minutes provided the Aussie Dollar with direction.

For the Aussie Dollar

Salient points from the RBA meeting minutes included:

  • Members expected 2nd quarter growth to be firmer. Members also expected supply disruptions and mining investment to be less of a drag on exports.
  • Partial indicators point to subdued consumption growth in the quarter, however.
  • The RBA expected dwelling investment to have declined further in the quarter. Public demand and non-mining business investment were expected to have continued to support growth.
  • While the outlook for consumption remained uncertain, the risks around the outlook were more balanced.
  • While there were improvements in the housing sector, members expect it could take some time for conditions to stabilize and for construction activity to pick up.
  • The unemployment rate held at 5.2%. While the unemployment rate held steady, the employment to population ratio and participation rate remained around record highs.
  • The outlook for the labor market was one of the key uncertainties for the forecasts, with implications for wage growth, household income, and consumption.
  • A lack of wage growth pressure led to a lack of inflationary pressure.
  • The escalation of the trade and tech disputes had increased downside risks to the global economic outlook.
  • Overall, the domestic risks to the forecast for output growth were tilted to the downside near-term.
  • Based on the numbers, an extended period of low-interest rates is required to make sustained progress towards full employment and the inflation target.
  • Members would consider further easing if the accumulation of additional evidence suggested a need for further support to sustain growth and achieve the inflation target.

The Aussie Dollar moved from $0.67643 to $0.67672 upon release of the minutes. At the time of writing, the Aussie Dollar was up by 0.04% to $0.6767.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.03% to $0.6409, while the Japanese Yen was up by 0.05% to ¥106.59 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s another relatively quiet day ahead on the economic calendar. German wholesale inflation figures for July are due out later today.

Barring a marked pickup in wholesale inflationary pressures, we expect the numbers to have a relatively muted impact on the EUR.

Any updates from Beijing or Washington on trade talks will impact as the EUR struggles following last week’s dovish ECB chatter.

At the time of writing, the EUR was up by 0.08% to $1.1087.

For the Pound

It’s a quiet day ahead on the data front. August CBI industrial Trend Orders are due out of the UK this afternoon.

With stats on the quieter side, we can expect the Pound to be sensitive to today’s figures.

While the Pound will respond, any chatter on Brexit will likely overshadow today’s figures.

At the time of writing, the Pound was up by 0.05% to $1.2132.

Across the Pond

It’s a particularly quiet day on the economic calendar.  There are no stats due out of the U.S later today to provide the Dollar with direction.

The lack of stats will leave the Dollar sensitive to any chatter from Washington. The administration has now extended another olive branch, suggesting that concerns over the economic outlook are testing Trump’s resolve… That could all change rapidly, however.

At the time of writing, the Dollar Spot Index was down by 0.02% to 98.325.

For the Loonie

It’s a relatively quiet ahead on the economic calendar. Manufacturing sales figures for June are due out later this afternoon.

Any response to the stats will likely be short-lived as market sentiment towards the global economic outlook and trade remain key drivers.

The Loonie was up by 0.01% at C$1.3323, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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