Sean Callow, research analyst at Westpac, points out that Australia had an incredibly busy week with Q3 GDP being the key economic release and it surged by just 0.3%qtr versus 0.6% consensus.
“Deepening the disappointment were downward revisions, leaving annual growth at 2.8%. The details weren’t encouraging either – business investment fell and consumer spending was weak, rising just 0.3%qtr. This weak GDP data, combined with global moves doubting Fed tightening, has seen interest rate markets remove all pricing for the RBA to raise the cash rate next year, hurting AUD.”
“The early data for Q4 was more encouraging. October retail sales rose 0.3%mth, 3.6%yr and Australia recorded a tenth consecutive month of trade surpluses, A$2.3bn in October.”
“Before this data, on Tuesday the RBA held the cash rate at 1.5% as unanimously expected. The RBA reiterated, “The Australian economy is performing well” although did express concern about signs of a slowdown in global trade, partly stemming from ongoing trade tensions. But overall there were no major surprises in their statement, and this marks yet another calendar year of rates on hold – which we expect to again be the case in 2019 and indeed 2020.”