The AUD is Weak

Daily Briefing, Aug 20 – Economic Events Outlook, RBA Meeting Minutes in Play

Posted Tuesday, August 20, 2019 by
Arslan Butt • 2 min read

Good morning, traders.

The month of August is holiday time for several people. This influences the forex market’s volume, which is typically lower. Although it doesn’t necessarily impact the volatility, it becomes pretty hard to determine the direction of the market. After the summer holidays, the moves will be stronger. Some currency pairs trade in narrow and expected ranges, while others go wild. Same has happened with gold lately, but for now, gold is stuck in a wide trading range of 1,524 – 1,489.

Anyway, the economic calendar is pretty light today, and investors are likely to focus on low impact events coming out from Canada, UK, and New Zealand. Let’s dig deeper.

Watchlist – Key Economic Events Today

AUD – Monetary Policy Meeting Minutes Released

The Reserve Bank of Australia releases the monetary policy meeting minutes 11 times in a year, approximately 2 weeks after the Cash Rate decision. It’s a detailed record of the Reserve Bank Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates;

The RBA minute statement advocates the Australian Dollar’s (AUD) vulnerability as being supportive of export, tourism while repeating its view to consider further policy easing if needed. The statement also mentions that it is reasonable to expect an extended period of low-interest rates. With that, we experienced a spike and a slight sell-off in Aussie during the late Asian session.

GBP – CBI Industrial Order Expectations – 10:00 GMT

The Confederation of British Industry releases figures on a monthly basis, but it’s a low impact economic data and typically drives less to no moves in the market. Considering the lack of fundamentals, Sterling may remain sensitive towards CPI Industrial Order Expectations.

Since we don’t cover this event usually, let me help you understand what Industrial Order Expectations actually is and how it impacts the market. Well, it’s a leading indicator of economic health – businesses react quickly to market conditions, and changes in their expectations can be an early signal of future economic activity such as spending, hiring, and investment.

How It Is Driven?

Basically, it’s driven via a survey of about 550 manufacturers which asks respondents to rate the relative level of order volume expected during the next 3 months.

How it Impact the Market?

The outcome of the survey is compared with a benchmark rate of 0. Above 0 indicates an increase in order volume is expected, while below indicates expectations are for lower volume.

Economists are expecting a slowdown in the orders -25 vs. -34, which is better than the previous figure but still way below the benchmark rate of 0. We may see bearish pressure on the Sterling ahead of the news release, as investors are likely to price in negative data in advance.

CAD – Manufacturing Sales m/m – 12:30 GMT

Statistics Canada will release retail sales with a forecast of -1.8% drop vs. 1.6% surge in the previous month. The figure reports a change in the total value of sales made by manufacturers.

The Canadian dollar is also likely to feel a bearish pressure ahead of news release amid sentiments.

USD – FOMC Member Quarles Speaks – 22:00 GMT

Lastly, the Federal Reserve Governor Randal Quarles is due to speak about community development at the Utah Center for Neighborhood Stabilization, in Salt Lake City. Since it’s not directly related to monetary policy, we may see a muted impact of the event on US dollar. Yet, we should keep an eye to capture any surprising remarks regarding upcoming interest rates.

That’s all for now, see you again with the technical trade setups. Good luck!

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