August 13, 2019
The Australian dollar’s short-term gains reversed on Friday evening following US and global shares market retracing with the S&P500 closing down 0.7%. Trade war concerns were the main driver of global selling following President Trump’s reluctance to form a deal with China.
Key economic releases from across the globe this week include: Australia: consumer and business confidence figures, wage price index and employment figures; US the inflation rate, retail sales, industrial production, housing data and flash Michigan’s consumer sentiment; UK unemployment, wage growth, inflation and retail sales; Eurozone: Germany Q2 GDP, industrial production, flash employment change and trade balance; Rest of the World: Chinese industrial output, retail sales, fixed asset investment and house price index; Japanese machinery orders and corporate goods prices; Canadian Non-Farm Employment Change.
The Aussie dollar short-term gains were quickly washed away as trade war concerns still dominate markets with AUD/USD falling 0.2%. Against the British Pound the Australian dollar is approaching its 2019 highs as concerns regarding a no deal Brexit loom. The RBA has reduced its growth forecast for the Australian economy for 2019 to 2.5% and further reduced its growth expectations for 2020. The ongoing trade war issues means that China will remain in focus this week. Globally exposed currencies like the Aussie dollar will remain at risk of manipulation as a result of ongoing US-China trade woes. Important data in the form of Australian job number due on Thursday this week will be closely watched by market participants and key ahead of the RBA’s meeting next month.
The US dollar continues to remain strong against the Australian dollar with President Trump stating he is “not ready to make a deal” with China. This heaped more uncertainty on global markets causing a drive to safer assets. Against the British Pound the dollar is edging closer to 1.20 driving GBP/USD to a 30-month low. This week sees the US publish data in the form of their inflation rate, retail sales, industrial production, housing data and flash Michigan’s consumer sentiment.
Friday trading saw GBP fall against a basket of currencies as Q2 growth data reported that the economy had shrunk for the first time since 2012 and Brexit uncertainty still looms. On the back of this news the pound fell against the Aussie Dollar and visited the depths of 1.2028 against the US dollar. Growth for the UK remains above 1% but the recent negative GDP print has alarmed investors who are already poised for the UK to leave the EU this October absent of a trade deal. Data this week from the UK comes in the form of unemployment, wage growth, inflation and retail sales All have the potential to mover the already sensitive British Pound.
The Aussie dollar has enjoyed a 0.8% appreciation against the Euro and is managing to hold on to key psychological levels. Data out of the Eurozone this week will include Q2 GDP from Germany, industrial production, flash employment change and trade balance figures.
Rest of the World
Strong Canadian employment figures has pushed AUD/CAD to nearly nine-year lows. The spotlight will remain on China this week with industrial production, retail sales and the unemployment figures due out this Wednesday. Meanwhile, in other market news Fitch Ratings Agency raised Russia’s sovereign credit rating on Friday to ‘BBB’ from ‘BBB-’ citing a stable outlook. They noted that the main drivers behind the upgrade were due to a credible and consistent policy framework that will deliver improved macroeconomic stability. Central banks in New Zealand, India, Thailand and the Philippines all cut interest rates with the RBNZ going with 0.5% markets were not expecting. Strangely, the Australian dollar suffered at the hands of this.
JPY – Bank Holiday
AUD – RBA Assistant Governor Kent Speaks
CNY – Foreign Direct Investment (13th – 15th)
CNY – New Loans
CNY – M2 Money Supply
EUR – German Final CPI
EUR – German ZEW Economic Sentiment
GBP – Average Earnings Index
GBP – Claimant Count Change
GBP – Unemployment Rate
USD – Core CPI
AUD – Westpac Consumer Sentiment
AUD – Wage Price Index
AUD – RBA Assistant Governor Debelle Speaks
CNY – Industrial Production
CNY – Retail Sales
CNY – Unemployment Rate
EUR – German Prelim GDP q/q
EUR – Flash GDP
EUR – Flash Employment Change
EUR – Industrial Production
GBP – CPI
USD – Import Price
AUD – RBA Assist Gov Debelle Speaks
AUD – MI Inflation Expectations
AUD – Unemployment Change
AUD – Unemployment Rate
GBP – Retail Sales
CAD – Non-Farm Employment Change
USD – Core Retail Sales
USD – Philly Fed Manufacturing Index
USD – Retail Sales
USD – Empire State Manufacturing Index
USD – Prelim Nonfarm Productivity q/q
USD – Unemployment Claims
USD – Industrial Production
NZD – Business NZ Manufacturing Index
EUR – Trade Balance
USD – Building Permits
USD – Housing Starts