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AUD in focus ahead of RBA monetary policy

Four markets in focus today: AUD/USD, USD/JPY, NY Cotton and Newscorp.

AUD/USD

The pair is currently sidelined at 0.896 heading into the RBA’s quarterly statement of monetary policy. Yesterday we saw the pair spike on the back of impressive trade balance, retail sales and business confidence data. Today’s statement should give more insight on inflation and outlook. Following the recent CPI reading, many analysts are expecting to see some revisions on the inflation front. If this materialises then we could see the AUD squeeze higher and AUD/USD test the 0.90 region.

USD/JPY

A drop in unemployment claims helped set the tone for a stronger USD. Unemployment claims came in at a better-than-expected 331,000 (versus 337,000 expected). USD/JPY rallied through 102 and continues to hold above that level early in Asia. Heading into the non-farm payrolls data I feel this is the pair to watch. The market is expecting 185,000 jobs added with unemployment steady at 6.7%. After last month’s disappointing reading, even an in line reading should be enough to lift confidence and bolster the USD. The break back above 102 could encourage traders to add to longs.

NY Cotton

A warning from Cotton Australia that production may decline due to drought conditions has seen cotton rise for three consecutive sessions. Generally when these runs start in commodities they tend to last for a while and we could see this happen with cotton as well. Australia is the world’s third biggest exporter of cotton and if drought conditions persist, global supply will be hurt.

Newscorp (NWS)

The company’s results came in ahead of estimates, despite continuing to battle declining advertising revenue. Profit smashed expectations, coming in at 31 cents a share when analysts expected 19 cents a share. Sales dropped to $2.24 billion but were still relatively in-line with estimates. Perhaps this set of earnings might finally see the stock come out of the consolidation phase it has been stuck in.

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