- AUD/JPY traders await next leg of key Aussie related events in GDP.
- RBA: “Growth is expected to strengthen gradually to be around trend over the next couple of years.”
AUD/JPY has popped up from below a descending resistance line on the 4-hour charts as the Aussie picks up a bid following a steady hand in the Reserve Bank of Australia’s latest interest rate decision and despite growing concerns about global growth. Any upside is unlikely to be sustained in the market’s risk barometer, AUD/JPY.
To add to the string of disappointing PMIs, the US has now joined the herd. The US manufacturing activity unexpectedly contracted in August for the first time in three years. This follows on from weak PMIs in various regions, including the EU and China over the weekend.
On the trade war front, there are no signs of a meeting so far for this month ahead and President Trump said that China will have a much tougher time of securing a trade deal if they wait until after the 2020 US Presidential election which likely means there has not been any progress between Beijing nor Washington in recent days.
Commodities faring up on weaker Dollar
When taking a look around, the commodity markets have enjoyed a drop in the Dollar and it seems that additional gains in gold have supported the precious metals and wider commodity sector higher which is a supportive factor for the Aussie.
GDP on the cards
Meanwhile, the calendar remains packed for Australia today, with the Gross Domestic Produce now on tap. Analysts at ANZ Bank expect 0.5% for Q2, bringing annual growth to 1.4% (lowest annual result since GST):
“Private demand looks to have fallen by 0.3% q/q in Q2 following a similar fall in Q1, to be down 0.6% over the year. The mainstay of economic growth right now is public demand, which looks to have contributed 1.6ppt to annual growth. This highlights the difficulty for the government and the RBA, in generating measures to support the economy when public spending is already the key driver of growth.”
Analysts at Westpac noted that in yesterday’s statement, the RBA conceded H1 2019 growth “has been lower than earlier expected” but insisted that growth “is expected to strengthen gradually to be around trend over the next couple of years.”
AUD/JPY levels
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