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Bob Mason
The Reserve Bank of Australia Sydney New South Wales Australia

Earlier in the Day:

The economic calendar was on the busier side once more this morning.

Australia current account and retail sales figures provided direction in the early part of the day. At the start of the day, the UK’s BRC Retail Sales Monitor added to the negative market angst.

Outside of the stats, the RBA delivered its June monetary policy decision and rate statement.

For the Aussie Dollar,

The Stats

Retail sales fell by 0.1% in April, coming up short of a forecasted 0.2% increase. Retail sales had increased by 0.3% in March. According to figures released by the ABS, the decline was attributed to falls in,

  • Household goods retailing (-0.9%), Cafes, restaurant and takeaway food services (-0.7%) and clothing, footwear and personal accessory retailing (-1.2%).
  • The falls were partially offset by increased retail sales in other retailing (+0.8%), department stores (+1.8%) and food retailing (+0.2%).

The current account deficit narrowed from A$6.3bn to A$2.9bn in the 1st quarter, according to figures released by the ABS. Forecasts were for a narrowing to A$2.5bn.

The Aussie Dollar moved from $0.69654 to $0.69657 upon release of the figures that preceded the RBA policy decision.

The Rate Cut

The RBA cut rates by 25 basis points to 1.25%, which was in line with market expectations. Salient points from the latest RBA rate statement included:

  • The Board cut rates today to support employment growth and ensure that inflation will be in line with the medium-term target.
  • The economic outlook remains tilted to the downside as a result of trade uncertainty.
  • Growth in international trade remains week, with uncertainty weighing on investment intentions.
  • Central scenario is for the Australian economy to grow by around 2.75% in 2019 and 2020.
  • Domestic uncertainties continue to be over the outlook for household consumption.
  • While employment growth has been strong, overall wage growth remains low.
  • In spite of softer inflation, inflation is expected to pick up and will be boosted in the 2nd quarter by increases in petrol prices.
  • The central scenario remains for underlying inflation to be 1.75% for this year, and 2% for 2020.
  • Today’s rate cut will assist with faster progress in reducing unemployment and drive inflation towards the target.

The Aussie Dollar moved from $0.69731 to $0.69929 upon release of the rate statement before easing back. At the time of writing, the Aussie Dollar was up 0.09% to $0.6983.


At the time of writing, the Kiwi Dollar was down by 0.12% to $0.6590, while the Japanese Yen was up by 0.14% to ¥107.92 against the U.S Dollar. Risk off sentiment provided direction for the majors in the early part of the day.


The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Spanish employment change figures are due out early on. Later in the morning, the Eurozone’s prelim inflation figures and unemployment rate are due out.

Key drivers on the day will likely be the Eurozone’s core annual inflation rate and April unemployment rate. While the unemployment rate is expected to hold steady at 7.7%, the markets forecast that core annual rate of inflation will slow from 1.7% to 1.3%, which is EUR negative.

Outside of the stats, risk aversion, bets on the FED and ultimately any moves in the bond markets will continue to impact.

At the time of writing, the EUR was up 0.08% to $1.1250.

For the Pound

The UK’s May construction PMI is due out later this morning. While forecasts for the PMI to hold steady at 50.5, weak numbers could test the Pound’s resilience following the poor manufacturing PMI numbers on Monday.

Outside of the numbers, UK politics and sentiment towards Brexit will continue to play a hand.

At the time of writing, the Pound was up 0.03% to $1.2668.

Across the Pond

It’s a quieter day on the economic calendar. April factory orders and orders for non-defense capital goods excl. aircrafts due out this afternoon.

We can expect the markets to be particularly sensitive to any disappointing numbers on the day.

On the policy front, FED Chair Powell will speak ahead of the stats. It remains to be seen whether the FED Chair changes his stance on the economy and policy.

At the time of writing, the Dollar Spot Index was up 0.04% to 97.183.

For the Loonie

It’s another quiet day ahead, with no material stats due out.

Stats out of the U.S and any chatter from the U.S administration on trade will dictate direction through the day.

The Loonie was down by 0.04% to C$1.3443, against the U.S Dollar, at the time of writing.

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