Talking Points:
- The Australian Dollar didn’t move far despite higher-than-expected corporate profits
- There was no repeat of 4Q’s bonanza, but that was commodity-price-based and unrepeatable
- There’s a lot for AUD/USD investors to focus on this week
So, it’s your favorite currency. Who agrees? Check out our sentiment page for some idea of the company you’re in.
The Australian Dollar was steady Monday following news of higher-than-expected corporate profits in its home country.
Profits rose by 6% in this year’s first calendar quarter. That was above the 5% rise which markets were looking for. The previous period had been flattered by a surge in commodity prices which saw overall Australian profits up by more than 20%, boosted by mining-company outperformance. Nobody expected a repeat of that strong showing, but the fact that profits managed to push on by more than forecast is clearly an encouraging sign for Australia Inc.
Inventories also rose strongly, gaining 1.2% when a 0.5% rise had been expected. This may be a good sign for Australian Gross Domestic Product data. They are due on Wednesday.
Still, there wasn’t a huge data-specific reaction in AUD/USD. It had been creeping upward before the numbers and continued to do so after the release.
Still, the market is probably cautious as this week will offer many likely market-moving events, both from Australia and overseas.
Closest to hand, the Reserve Bank of Australia will announce its June monetary policy decision on Tuesday.
No change is expected. At present rate futures don’t price in any rise for Australia’s record-low 1.5% official cash rate this year and indeed well into 2018. That said, markets don’t expect rates to fall further either as RBA leaders have repeatedly worried that still-lower borrowing costs would only exacerbate the country’s high personal debt levels.
Get live coverage of major Asia/Pacific market movers, including Tuesday’s Australian interest-rate decision, at the DailyFX webinars
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
