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08/07/24
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AUD Flat Before Confidence Reports
On Monday, the Australian dollar drifted, and AUD/USD traded at about 0.6637, down 0.15% for the day in the North American session. With only one US release on the calendar and no US events, it should be a quiet day for the Australian currency.
Australian consumer and business confidence data will be released on Tuesday and markets are expecting soft numbers. The Westpac Consumer Sentiment index in June rose 1.7% after a nasty run of three consecutive declines but the July forecast is at -0.3%.
The NAB Business Confidence index fell to -3, the first drop in 5 months. It is expected the downtrend will continue in June, with the forecast at -5.
The RBA’s next meeting will be on August 6 and the CPI report for the second quarter, which will be released the prior week, will play a crucial role in the decision.
At the past two policy meetings, the RBA said it had discussed rate hikes before deciding to keep the cash rate at 4.10%. According to the ASX rate tracker, the markets are pricing in a 32% probability of a 0.25% rate hike at the meeting in August, versus 12% two weeks ago.
The inflation in China has been low as the country’s economy is still slowing and there is significant risk of deflation.
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