AUD AIG Performance of Manufacturing Index is the first of many important releases this week, as the result will report on the current health of the manufacturing sector. Previous results have shown that the manufacturing industry is in turmoil. Past results have continually been indicating contraction as releases have been consistently under the benchmark figure of 50. This month’s result is expected to continue that trend and remain under the benchmark.
It’s that time of month again as the Reserve Bank of Australia make (RBA) make their rate decision on Tuesday. You don’t have to be an economist to see what this month’s result is going to be. Rates are expected to remain on 2.5% after a recent announcement from RBA Governor Glenn Stevens all but flagging this course of action. Investors may see increased volatility though, as Governor Stevens (and in fact most Central Bank Chiefs) have moved exchange rates from comments alone, as opposed to (or in the absence of) policy decisions.
Wednesday contains another big release for Australia, being Gross Domestic Product (GDP). At a Year on Year figure, Australia’s production is set to be 3.2%, potentially surpassing the previous figure of 2.8%. This may cause investors to react bullishly towards the AUD. An increase in GDP figure of this magnitude is considered extremely rare for an economy. To support this GDP increase Australia has been releasing strong housing, inflation and employment figures. However, counterbalancing this, Chinese imports and iron ore prices have decreased recently. Furthermore, we’ve recently seen weaker trade balance figures, decreasing consumer confidence and retail sales.
These above mentioned variables will put a seed of doubt in investor’s minds for these big GDP targets. The GDP figures are due at 11.30pm Wednesday so keep your eyes glued to those minute charts for movements!!