FXStreet (Guatemala) – Greg Gibbs, analyst at RBS explained the conditions surrounding AUD/USD.
Key Quotes:
“A large contraction in mining sector investment can weigh on Australia’s Q1 GDP report, due on Wednesday. Consensus expects growth to slow from 2.5%y/y in Q4 to 2.0% in Q1 which would be the lowest annual growth since Q3- 2011. It’s a data rich period ahead with April building approvals, retail sales and trade balance due this week and the May survey of business confidence and employment report the following.”
“The negative economic outlook may have been exaggerated by that capex survey. Other domestic demand indicators have been firmer and it would not surprise to see firmer non-mining sector data in coming months. The RBA meeting this week may offer a more specific easing bias.”
“In meetings between rate cuts in February and May, the RBA said, “Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target.” The RBA may be reluctant to offer the same degree of clear guidance, but it could attempt to make some dovish reference in its statement.”
“A fair degree of the bearishness for the AUD arising from the mining sector down-turn may now be discounted. The bigger unknown is how other sectors of the economy perform. We are cautious about excessive bearishness at this point.”
(Market News Provided by FXstreet)