Major Trading News Events from Australia, EU and US
As expected, the RBA hiked its key interest rate from 1.85 percent to 2.35 percent to control rising inflation. Australia’s inflation rate reached 6.1 percent in July, well above the average target of 2 percent. The central bank is counting on a strong labour market and healthy growth in the all-important export sector to sustain the mortgage market after hiking interest rates for a fifth month in a row. In July, Australia’s unemployment rate fell to 3.4 percent amid a 15 percent rise in exports and a robust current account surplus of 18.3 billion AUD.
The RBA’s interest rate hike is followed by Australia’s latest Gross Domestic Product (GDP) reading which is due out tomorrow, September 7. Economic growth in the second quarter is expected to have risen to 1 percent from 0.8 percent in Q1. If the benchmark comes in as expected, it could support the AUD and investor sentiment. If not, there could be the opposite effect on confidence and on the AUD currency crosses.
On Friday, September 9, Australia’s trade balance for July is expected to have decreased to 14.5 billion AUD in July from 17.67 billion AUD in June. The timing of this release is sensitive as the export sector is a significant part of Australia’s growth.
Another red-flagged event comes out of the US later today when the ISM Services Purchasing Managers Index (PMI) for August will have insights into the health of one of the biggest sectors in the economy. The PMI results are expected to have fallen from 56.7 in July to 55.5 in August. If the actual results are lower than expected, there could be an impact on the USD currency crosses as recession fears may resurface.
EUR traders are bracing for the Eurozone’s GDP reading on September 7. The EU’s single currency has taken plenty of punishment in recent days, falling to 20-year lows under parity versus the USD. As investors are wary over the energy situation in the EU, much depends on GDP reaching expectations of 3.9 percent growth on an annual basis.
Falling crude oil spot prices are a turnaround and brighter spot for the Eurozone’s economy after supply fears inflated energy costs for much of the year. Natural gas supplies are expected to be much tighter, however, after the Nord Stream 1 pipeline from Russia to the EU was shut down in worsening relations between the two regions.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
