The little Aussie battler
The Australian Dollar on Friday night managed to recover some of the losses it sustained earlier in the week, to rally 0.7% against its US counterpart and push above 0.7400. The AUD/JPY also regained territory, with that pair finding a ceiling just shy of 82.00. As has been the case for the AUD of late, the move higher in the currency can be attributed to a sell-off in the USD over the weekend, as risk aversion eased and funds flowed into other major currencies such as the GBP and EUR. The dynamic pushed the AUD/EUR back down to resistance around 0.6330, and halted the AUD/GBP’s modest run above ~0.5600.
The data week ahead
The local economic data calendar is looking heavier this week, working in line with a big Tier 1 data week for global financial markets. The two local highlights will be tomorrow’s meeting of the RBA, before interest turns to Australian Retail Sales Wednesday.
The RBA will keep rates on hold at 1.50%, with attention to be fixed on the central bank’s accompanying statement. Interest markets have priced out a rate hike from the RBA until early 2020, with lagging wage growth expected to keep inflation (on balance) below the bank’s target range of 2-3%. This story will set the foundations for the day after’s Retail Sales figures, which have lagged recently, predominantly due to high household indebtedness and the weak wages growth.
Look for volatility in currency markets subsequent both releases, along with activity in consumer discretionary stocks after Wednesday’s consumption data.