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Earlier in the Day:

The economic calendar was on the busier side once more through the Asian session this morning. Key stats included retail sales figures out of the UK and Australia and 2nd quarter current account numbers out of Australia. Later in the session, the RBA also delivered its September interest rate decision and rate statement.

On the geopolitical front, there was plenty for the markets to consider through the day. Both Italy and Britain face the possibility of snap elections, while there were also doubts of any near-term progress on trade talks.


For the Aussie Dollar

The account balance grew from a revised A$1.1bn deficit to an A$5.9bn surplus in the 2nd quarter, coming in above a forecasted A$1.4bn surplus. It was Australia’s first current account surplus in 44-years.

Retail sales fell by 0.1%, month-on-month, in July, following a 0.4% increase in June. Economists had forecast a 0.2% increase. According to the ABS,

  • There were falls in four of the six industries and six of the eight states and territories in July.
  • Cafes, restaurants and takeaway services led the way down with a 0.6% fall.
  • Clothing, footwear and personal accessory retailing fell by 1%, with other retailing (-0.4%) and department stores (-0.2%) also seeing sales fall.
  • Food retailing and household goods retailing bucked the trend, with 0.3% and 0.1% increases respectively.

The Aussie Dollar moved from $0.67051 to $0.66690 upon release of the figures that preceded the RBA monetary policy decision and rate statement.


As expected, the RBA held interest rates steady at 1.0% this morning. Salient points from the RBA Rate Statement included:

  • Economic growth over the 1st half of the year was lower than previously anticipated. Household consumption weighed as a result of an extended period of low-income growth and falling house prices.
  • Growth is expected to strengthen gradually, supported by low-interest rates, tax cuts, infrastructure spending, stabilization in the housing markets and a brighter outlook for the resources sector.
  • The main domestic uncertainty continues to be the outlook for consumption.
  • Employment has grown steadily, with labor force participation sitting at a record high.
  • Wage growth remains subdued with little upward pressure, as strong labor demand is met with strong supply.
  • Inflation pressures also remain subdued and will likely remain so for some time to come.
  • There are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne. New dwelling activity has weakened, however, with growth in housing credit remaining low.
  • The Board will continue to monitor developments, including the labor market, and ease policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.

The Aussie Dollar moved from $0.66939 to a morning high $0.67116 upon release of the rate statement. At the time of writing, the Aussie Dollar was down by 0.17% to $0.6704. The RBA’s lack of commitment to a near-term rate cut reversed heavier losses from earlier in the session.


At the time of writing, the Kiwi Dollar was down by 0.43% to $0.6281, with the Japanese Yen down by 0.08% to ¥106.33 against the U.S Dollar.

U.S Dollar strength through the early session weighed left the trio in the red.


The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction to the EUR.

A lack of stats will leave the EUR exposed to geopolitical risk throughout the day and sentiment towards the global economic outlook.

Private sector PMI numbers out of the U.S later in the day could cause a stir should the ISM Manufacturing PMI reflect a contraction.

On the political front, news from both Italy and Britain on whether snap general elections will take place will influence on the day.

At the time of writing, the EUR was down by 0.28% to $1.0939.

For the Pound

It’s another relatively quiet day ahead on the data front. Economic data is limited to August’s Constructing PMI.

While we expect the numbers to influence the Pound, the market focus will remain on Brexit as MPs return from the summer break.

On Monday, British Prime Minister Boris Johnson announced plans to hold a snap general election should Pro-Remainers succeed in blocking a no-deal Brexit later today. More uncertainty over Brexit and the political landscape are doing the Pound no favors. Success in blocking a no-deal Brexit would be positive for the Pound, but not if that leads to a general election, the outcome of which would be shrouded with uncertainty.

Earlier in the day, the August BRC Retail Sales Monitor fell by 0.5% in August, year-on-year, reversing a 0.1% rise in July, to add further pressure on the Pound.

At the time of writing, the Pound was down by 0.26% to $1.2035.

Across the Pond

It’s a busier day ahead on the economic calendar, with the U.S markets returning from Monday’s holiday.

August Manufacturing sector PMI figures will provide the Dollar with direction later today. We expect the ISM Manufacturing PMI to have the greatest impact on the Dollar.

Outside of the numbers, FOMC member Rosengren is scheduled to speak later in the day. The markets are looking for a September rate cut, leaving the Dollar and the Equity markets sensitive to any hawkish chatter.

At the time of writing, the Dollar Spot Index was up by 0.36% to 99.271.

For the Loonie

It’s another quiet day ahead on the economic calendar, with no material stats due out of Canada.

The lack of stats will leave the Loonie in the hands of market risk sentiment.

The Loonie was down by 0.12% at C$1.3342, against the U.S Dollar, at the time of writing.

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