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Australian Dollar Shrugs Off Status-Quo RBA Policy Announcement

Australian Dollar Shrugs Off Status-Quo RBA Policy Announcement

Ilya Spivak,

Talking Points:

  • Aussie Dollar Yields Tepid Reaction to Status-Quo RBA Policy Announcement
  • Euro Likely to Look Past German Figures Data as ECB Meeting Looms Large
  • British Pound May Decline if UK PMI Weighs on BOE Rate Hike Speculation

The Australian Dollar edged higher as the RBA kept its benchmark interest rate unchanged at 2 percent, as expected. The move was relatively modest however, pushing prices toward highs recorded earlier in the session but failing to build substantive momentum thereafter. The currency scored initial gains following Australian Current Account and Chinese PMI data and corrected slightly lower amid pre-positioning before the RBA announcement crossed the wires.

The tepid response probably reflects the largely familiar tone of the policy statement accompanying the rate decision. Governor Glenn Stevens maintained that the Bank is in data-dependent mode going forward, repeating the now-familiar refrain that “the outlook for inflation may afford scope for further easing…should that be appropriate.”

Perhaps most interestingly, Stevens noted that “the pace of growth in dwelling prices has moderated” in the boom market of Sydney and Melbourne while remaining subdued elsewhere. He added that “supervisory measures are helping to contain risks that may arise from the housing market”. The buoyant housing market was an important reason to delay easing while macro-prudential efforts took hold. Signs that this may be happening could lower the bar for stimulus expansion in the months ahead.

Looking ahead, German Unemployment figures and the UK Manufacturing PMI report headline the economic calendar. The former data set seems unlikely to inspire a significant response from the Euro as traders look ahead to the ECB policy announcement due later in the week for substantive direction cues. The latter is forecast to show a slowdown in the pace of factory-sector activity. UK news-flow has deteriorated relative to consensus forecasts over the past month, opening the door for a downside surprise that may undercut BOE rate hike bets and weigh on the British Pound.

Losing Money Trading Forex? This Might Be Why.

Asia Session

21:45NZDTerms of Trade Index (QoQ) (3Q)-3.7%-2.6%1.5%
22:30AUDANZ Roy Morgan Weekly Consumer Conf.112.8-114.5
22:30AUDAiG Perf of Mfg Index (Nov)52.5-50.2
23:00AUDCoreLogic RP Data House Px (MoM) (Nov)-1.5%-0.2%
23:00NZDQV House Prices (YoY) (Nov)15.0%-14.0%
23:50JPYCapital Spending (YoY) (3Q)11.2%2.2%5.6%
23:50JPYCapital Spending Ex Software (3Q)11.2%1.7%6.6%
23:50JPYCompany Profits (3Q)9.0%-23.8%
23:50JPYCompany Sales (3Q)0.1%-1.1%
00:30AUDNet Exports of GDP (3Q)1.5%1.2%-0.6%
00:30AUDBoP Current Account Balance (A$) (3Q)-18.1B-16.5B-20.5B
00:30AUDBuilding Approvals (MoM) (Oct)3.9%-2.5%2.3%
00:30AUDBuilding Approvals (YoY) (Oct)12.3%5.7%22.0%
01:00CNHManufacturing PMI (Nov)49.649.849.8
01:00CNHNon-manufacturing PMI (Nov)53.6-53.1
01:35JPYNikkei Japan PMI Mfg (Nov F)52.6-52.8
01:45CNHCaixin China PMI Mfg (Nov)48.648.348.3
03:30AUDRBA Cash Rate Target (Dec 1)2.0%2.0%2.0%
05:00JPYVehicle Sales (YoY) (Nov)0.3%-0.2%
05:30AUDCommodity Index AUD (Nov)75.6-79.1
05:30AUDCommodity Index (YoY) (Nov)-22.0%--19.8%

European Session

06:45CHFGDP (QoQ) (3Q)0.2%0.2%Medium
06:45CHFGDP (YoY) (3Q)0.8%1.2%Medium
07:00GBPBOE Financial Report, Stress-Test Results --Medium
08:00GBPBoE Governor Carney Holds Press Conference --Medium
08:15CHFRetail Sales Real (YoY) (Oct)-0.2%Low Mfg PMI (Nov)50.850.7Low
08:45EURMarkit/ADACI Italy Mfg PMI (Nov)54.254.1Low
08:50EURMarkit France Mfg PMI (Nov F)50.850.8Low
08:55EURGerman Unemployment Change (Nov)-5k-5kMedium
08:55EURGerman Unemployment Claims Rate (Nov)6.4%6.4%Medium
08:55EURMarkit/BME Germany Mfg PMI (Nov F)52.652.6Medium
09:00EURMarkit Eurozone Mfg PMI (Nov F)52.852.8Medium
09:30GBPMarkit UK PMI Mfg SA (Nov)53.655.5High
10:00EUREurozone Unemployment Rate (Oct)10.8%10.8%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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