The RBA Cut Rates ahead of a Busy Day on the Economic Calendar

The RBA cut rates by 25 basis points ahead of a busy economic calendar today. The EUR, GBP, Greenback, and the Loonie are all in action today.
Bob Mason
Forex Yearly

Earlier in the Day:

It was another particularly busy day on the economic calendar through the Asian session this morning.

New Zealand business confidence numbers, Australia manufacturing index and Japan’s Tankan survey numbers provided direction early on.

Later in the session, building approval figures out of Australia and the RBA interest rate decision also influenced.

Geopolitical risk took a back seat early on, with the news wires on the quieter side through the early hours.

For the Kiwi Dollar

The NZIER Quarterly Survey of Business Survey (QSBO) showed that a net 35% of businesses expect a deterioration in general economic conditions in the coming months. The increase in pessimism from 34% to 35% left business confidence at its lowest level since March 2009. According to the survey,

  • The manufacturing sector remained the most pessimistic, while there were also signs of construction demand slowing.
  • Retailers were also more downbeat as a result of weaker demand, with profitability in the sector at its weakest since Sep-09.
  • Increased cost pressures and weak pricing power reportedly continued to weigh on profitability across most sectors.
  • As a result of weakening profitability, a net 10% of firms cut staff numbers, which reflected the weakest level in hiring since Sep-12.
  • Investment intentions were also negative, with investment intentions for buildings and plant & machinery both falling to their lowest levels since Sep-09.

The Kiwi Dollar moved from $0.62628 to $0.62578 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.26% to $0.6247.

For the Japanese Yen

The Tankan surveys delivered mixed results for the quarter.

The All Big Industry CAPEX Index rose by 6.6% in the 3rd quarter, falling short of a forecasted 7.0%. CAPEX had risen by 7.4% in the 2nd quarter.

The Tankan Big Manufacturing Outlook Index slipped from 7 to 2 in the 3rd quarter, which was better than a forecasted fall to 1.

For the manufacturing sector, the Tankan Large Manufacturers Index fell from 7 to 5 in the quarter, which better than a forecasted 2.

For the non-manufacturing sector, the Tankan Large Non-Manufacturers Index declined from 23 to 21 in the quarter. Forecasts were for a fall to 20.

The Japanese Yen moved from ¥108.065 to ¥108.061 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.17% to ¥108.26 against the U.S Dollar.

For the Aussie Dollar

The AIG Manufacturing Index rose from 53.1 to 54.7 in September. According to the latest survey,

  • Employment and new orders picked up in September, supported by the F&B and Machinery and Equipment manufacturing sectors.
  • The F&B sub-index rose by 0.2 points to 59.2, while the Machinery & Equipment index increased by 2.5 points to 56.7.
  • By sector, metal products (41.3) and TCF, Paper & Printing (41.8) continued to contract.
  • Looking at the sub-indexes, the new orders sub-index rose by 3.8 points to 57.1, with the employment sub-index rising by 6.2 points to 57.6.
  • Exports were in decline, however, falling by 6.1 points to 49.6, with the production sub-index falling by 3.4 points to 49.8.
  • Average wages continued to rise, with the sub-index up 3.5 points to 63.8.

The Aussie Dollar moved from $0.67502 to $0.67501 upon release of the figures that preceded the RBA interest rate decision and building approval figures.

Month-on-month, building approvals fell by 1.1% in August, following on from a 9.7% slide in July. Economists had forecast a 2.5% rise. According to the ABS,

  • A 2.4% slide in the approval of private houses weighed in August.
  • Approvals excluding houses rose by 3.1%

The Aussie Dollar moved from $0.67518 to $0.67519 upon release of the figures that preceded the RBA interest rate decision.

Later in the session, the RBA cut interest rates by 25 basis points to 0.75%, which was in line with market expectations, which left the Aussie Dollar in the hands of the RBA Rate Statement.

The rate statement reflected the RBA’s willingness to ease monetary policy, which weighed on the Aussie Dollar.

The Aussie Dollar moved from $0.67457 to $0.67357 upon release of the rate statement. At the time of writing, the Aussie Dollar was down by 0.21% to $0.6736.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. September manufacturing PMIs out of Spain and Italy and finalized manufacturing PMIs out of France, Germany and the Eurozone will influence early in the session.

Later in the session, prelim Eurozone inflation figures will also influence. Any upside would be limited for the EUR, however, with negative sentiment towards the Eurozone economy pinning back the EUR.

Outside of the numbers, expect Brexit chatter and impeachment talk from the U.S to also influence.

At the time of writing, the EUR was down 0.08% at $1.0891.

For the Pound

It’s also a relatively quiet day ahead on the data front. September’s manufacturing PMI is due out later this morning.

With the UK economy struggling, a more accelerated decline in manufacturing sector activity would weigh heavily on the Pound.

Outside of the numbers, expect chatter on Brexit and the UK Parliament to also provide direction through the day.

The Pound is going to need talk of a deal to prevent a move lower to $1.21 levels…

At the time of writing, the Pound was down by 0.01% to $1.2288.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. Key stats include the market’s preferred ISM Manufacturing PMI for September. We can expect the employment and new orders sub-index to have the greatest influence alongside the headline figure

The Markit survey’s finalized manufacturing PMI is also due out but will likely have a muted impact on the day.

On the political front, any impeachment talk and chatter on trade will need consideration.

The Dollar Spot Index was up by 0.10% to 99.479 at the time of writing.

For the Loonie

It’s a relatively quiet day on the economic calendar. July GDP numbers are due out of Canada later this afternoon.

With the markets expecting the BoC to hold steady on rates, softer numbers would weigh heavily on the Loonie. For now, the Loonie continues to find support from monetary policy divergence.

On Monday, the Liberal Party’s announcement of a ramp-up in government spending had offset the negative impact of crude oil prices on the day.

The Loonie was down by 0.04% at C$1.3246, against the U.S Dollar, at the time of writing.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.