If you thought that last week experienced exchange rate movement; this week’s movements may prove to be larger. Already from China on Sunday we had the first release of the Purchasing Managers Index. This came from the “in house” projections of both their Non-Manufacturing and Manufacturing data. Both figures came in at a slight decrease from previous figures. The AUD as of this morning has already lost 0.5% on many of the majors.
Today we have a third party perspective on the same figures out of China released by the research company, Markit. These figures are typically much lower than the “in house” survey from China, and are typically regarded as a better representation of China’s performance. The Figure from Markit is expected to be at 47.7 this month – up from last month’s 47.2 figure. However, considering the Chinese figure over the weekend was down, we can expect that it would place downward pressure on this release.
The most anticipated event this week concerning the AUD will be the Reserve Bank of Australia’s rate decision on Tuesday. Up until last week, the rates were set to be on hold; however, last week’s release of Australia’s Inflation figures showed that there is much more room for a cut with the quartile figure coming in at 0.5% from 0.7%. Officially, as of the 30 October, The ASX 30 day interbank cash rates futures for November 2015 was trading at 98.110. Therefore the market expectation for a 0.25% rate cut currently lies on 49% chance for the RBA to cut to 1.75% from 2%.
To end the week, Australia will release its Retail Sales and Trade Balance figures on Wednesday. The expectations on both figures will be for a similar figure to the previous month’s figure. This will allow for deviation in the actual figures; so we can still expect a lot of volatility around 11.30AEST, Wednesday.
Finally Thursday and Friday will cap off the weeks movement with Governor of the RBA, Glenn Stevens making an announcement at the Melbourne institute’s Economic and Social Outlook Conference. This will allow the market to gain further insight as to why the interest rate was held/cut on Tuesday; also giving the market some sort of clue about the future monetary policy.
On Friday, The RBA will release their Monetary Policy Statement; by the time of release this information should be well baked into the cake; however the end of the week’s announcements will be completely driven by the start of the week’s decisions and releases.