After a week of heavy domestic and international data last week, the Australian economy appears to taking a break today, with little to no local economic releases occurring.
After last week’s poor Australian employment figures, the Australian Dollar may just welcome the chance to regain some footing after losing close to a percent against the majors in the latter half of the week. There is a lack of high-tier international data to be announced today so we can expect trading levels to be somewhat range-bound today.
On Friday the Reserve Bank of Australia made its’ Statement on Monetary Policy. The biggest surprise from the statement was that the RBA lowered its growth forecast for 2014 from 2.75% to 2.5% as well as lowering its growth forecast for 2015 from 3.25% to 3.0%. The ‘Aussie’ continued to fall slightly following the statement on Friday and remains vulnerable after losing considerable ground in the lead up to the weekend.
Looking forward, the rest of the week looks rather quiet in terms of economic data out of Australia. Tomorrow we have some medium-tier Business Confidence data, however it is likely that the Chinese data out on Wednesday will be more significant to influencing the strength of the AUD. The Retail Sales and Industrial Production figures for the month of July that are to be announced out of China have been forecasted to be in-line with the previous month’s results. Higher than expected figures will provide support for the Aussie, but conversely, weaker than expected figures will likely see the AUD fall in its’ current vulnerable state.
Tomorrow evening German and Euro-Zone economic sentiment figures will provide an insight into the economic outlook of the European nations which may provide some degree of assistance to Euro value if the announcement indicates a positive view. Despite recent gains by the EUR against the AUD, the longer term trend of a falling Euro still appears valid and any further gains may be short-lived.
Gross Domestic Product figure releases appear to dominate the high-tier international economic releases this week. The Japanese economy will announce their GDP Wednesday morning, followed by the Euro-Zone Thursday evening and finally the UK on Friday. This key economic indicator is likely to be the main catalyst for the major movements on the currency board this week.