Yesterday the Reserve Bank of Australia announced their rate decision and the result was that the cash rate was held at 2.5% as anticipated. The accompanying notes once again commented on the fact that the AUD remains high by historical standards and that the RBA forecasts a likely period of interest rate stability. The RBA also mentioned that inflation is expected to be consistent with the 2-3% target and that monetary policy remains accommodative, meaning that the cash rate will be changed if current economic conditions change. The market responded to this news through the AUD gaining close to half a percent against the majors on the currency board.
An abundance of domestic data out of Australia is gracing economists this week following a week of relatively little to no local economic data being posted. Local data out Monday indicated that New Home Sales in Australia for the month of June decreased from the previous months’ 2.9% growth, to negative 4.3%, which proved to be a stumbling block for the ‘Aussie’ earlier in the week. Today we await the release of Trade Balance figures out of Australia for the month of May.
Further volatility to the South Pacific currency will be created tomorrow through the release of Australian Retail Sales figures for the month of May and the month-on-month and year-on-year Building Approvals results. Chinese Purchasing Managers Index (PMI) will be announced after the Australian data release and a numerical figure above 50 should give support to the strength of ‘Aussie’.
With the Australian Dollar currently trading at a 7 month high against the USD, economists will turn their attention towards the employment data out of the US on Friday night. This will be the key indicator as to whether or not the Aussie will continue its’ gain against the Greenback. The US Unemployment Rate is expected to remain at 6.3% and there is not much change expected to the Non-farm Payrolls from the previous month. If the US fails to achieve the economic expectation relating to employment figures, then we can expect to see the ‘Aussie’ continue to climb against the USD.