Australian Dollar Suffered from RBA (Weekly Review)

Among important events of the past week causing movements in respective currency pairs, we’d like to mention the meetings of the Reserve Bank of Australia and the Bank of England. Both central banks, in full accordance with the forecasts of financial market participants, left interest rates unchanged, but their comments caused rather sharp movements in pairs with the Australian dollar and the British pound.

In the interest rate statement, the RBA, for the first time in a long period of time, suggested the possibility of lowering the interest rate, which triggered sales of the Australian dollar, and as a result it fell down paired with the USD to 0.7061. This fall and weekly closure suggest a further decline to the psychological level of about 0.7000, but positive news from the US-PRC trade negotiations could return demand for the AUD.

Initial negative reaction to the British pound was caused by the Bank of England lowering the forecast for the UK economy growth dynamics, but hopes for success in Theresa May’s negotiations with the EU on Brexit once again promoted buying of the depreciating GBP, while the bulls did not manage to return it above the psychological level of 1.3000 reached earlier. In the absence of real progress in negotiations, the pound will remain vulnerable, and positive news will contribute to breaking through 1.3000 and resuming growth. 

Schedule for this week: 

Monday, February 11
09:30 GMT – United Kingdom. Goods Trade Balance;
09:30 GMT - United Kingdom. GDP (MoM) (Dec);
09:30 GMT – United Kingdom. GDP (QoQ) (Q4);
09:30 GMT - United Kingdom. Industrial Production;
09:30 GMT - United Kingdom. Manufacturing Production;
13:30 GMT - USA. Unit Labor Costs (Q4).

Tuesday, February 12
00:30 GMT - Australia. Invest Housing Finance;
00:30 GMT - Australia. Home Loans;
02:15 GMT - PRC. Foreign Direct Investment (FDI);
13:55 GMT - USA. Redbook Index;
17:45 GMT - USA. Federal Reserve Chair Jerome Powell Speaks;
18:45 GMT - USA. Federal Reserve Chair Jerome Powell Speaks.

Wednesday, February 14 
21:00 GMT – New Zealand. Reserve Bank of New Zealand Press Conference;
01:00 GMT – New Zealand. Reserve Bank of New Zealand Interest Rate Decision;
01:00 GMT - New Zealand. Reserve Bank of New Zealand Monetary Policy Statement;
01:00 GMT - New Zealand. Reserve Bank of New Zealand Rate Statement;
09:30 GMT - United Kingdom. Consumer Price Index (CPI);
09:30 GMT - United Kingdom. Core Consumer Price Index (CPI);
10:00 GMT - Eurozone. Industrial Production;
13:30 GMT - USA. Consumer Price Index (CPI);
13:30 GMT - USA. Core Consumer Price Index (CPI);
19:00 GMT - USA. Federal Budget Balance (Jan).

Thursday, February 15
23:50 GMT - Japan. GDP (QoQ) (Q4);
00:00 GMT - Australia. Inflation Expectations (Feb);
02:00 GMT - PRC. Trade Balance;
02:00 GMT - PRC. Import/Export:
07:00 GMT - Germany. GDP (QoQ) (Q4);
07:00 GMT - Germany. GDP n.s.a. (QoQ) (Q4);
10:00 GMT - Eurozone. GDP;
10:00 GMT - Eurozone. Employment Rate;
13:30 GMT - USA. Initial Jobless Claims;
13:30 GMT - USA. Retail Control;
13:30 GMT - USA. Retail Sales.

Friday, February 16
21:30 GMT - New Zealand. Business NZ Purchasing Managers Index (PMI);
01:30 GMT - PRC. Consumer Price Index (CPI);
04:30 GMT - Japan. Industrial Production;
10:30 GMT - United Kingdom. Retail Sales;
14:15 GMT – USA. Industrial Production;
15:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst