The Australian dollar falls as the RBA keeps rates on hold

The Reserve Bank of Australia

As expected, the Reserve Bank of Australia kept its cash rate at 4.1% for a third month. In its statement, the Reserve Bank of Australia (RBA) said the Australian economy was experiencing a period of below-trend growth and expected it to continue for a while. The RBA warned again that further tightening might be needed to bring it to heel in a reasonable timeframe.

Yesterday, a Reuters poll on RBA rates said most economists expect a final rate hike next quarter. It added that inflation was still too high and noted that service price inflation had been surprisingly persistent overseas and that the same could occur in Australia.

Caixin/S&P Global Services

China's service activity expanded in August, but at the slowest pace in eight months. The Caixin/S&P Global Services the purchasing managers' index (PMI) dropped to 51.8 from 54.1 the previous month. Details of the survey show that the increase in new orders is below the average seen for 2023 to date, and new export business fell for the first time since December. Caixin/S&P's composite PMI, which compiles both manufacturing and services activity, edged down to 51.7 from 51.9 in July, the weakest expansion since January.

British Retail Consortium

In the UK, British Retail Consortium (BRC) like-for-like sales growth, a measure that adjusts for changes in store space, rose to 4.3% in August, accelerating from a 1.8% gain in July, the fastest pace in four months. Still, the August figure came in below the 6.8% consumer inflation rate in the UK for July, indicating that sales fell in volume terms.

Eurozone producer price index

Later today, the producer price index in the eurozone is expected to fall by 0.6% in July month-over-month (MoM). Year-on-year production price index (PPI) should fall by 7.6%, and US factory orders are anticipated to fall by 2.5% in July MoM.

Chevron's Gorgon and Wheatstone LNG

In Australia, disputes over pay and working conditions at Chelverton's Gorgon and Wheatstone LNG projects escalated. The union has already called for industrial action for seven days starting this coming Thursday if parties cannot find a resolution. Unions now plan a total strike for two weeks starting on April 14. September.

Gorgon and Wheatstone projects account for more than 5% of global LNG capacity, and traders worry about the risk of long-term disruption. There has been no or little effect on gas prices so far, as high storage levels suppress short-term prices. However, if industrial action were to persist, analysts foresee complications in the supply chain.