Later this week we will see important unemployment data down under which could help support the dollar. The Reserve Bank of Australia is keeping a close eye on this data as concerns have started to mount over the performance of the economy. Unemployment is expected to hold firm at 5.3% but worries over weak wage growth and a cooling housing market are averting any action being taken at this time.
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Expect a volatile end to the week for Australian dollar exchange rates, with important Chinese economic data released on Friday. Chinese Gross Domestic Product (GDP) data will be released which should give a good snapshot as to the health of the Chinese economy and whether the trade wars have had a negative impact on growth. Expectation is for a small decline on the quarter down to 1.6% from 1.8%. Any slowdown in China and the global economy is seen as negative for the Australian dollar, considering China comprises Australia largest export market. There has already been a flight to the safety of the US dollar away from the Aussie, and any proof that trade tariffs are hurting growth will likely result in further Australian dollar weakness. Chinese retail sales data is also released this week which could also help to paint the picture of the health of the Chinese economy, as the impact of these trade wars begins to show.
Those clients with a GBP AUD requirement should pay close attention to Wednesday's EU summit where the fate of Brexit and possibly the Prime Minister could be decided.
The Reserve Bank of Australia minutes from the last meeting were released overnight and showed once again that there is no appetite to raise interest rates now, with the first rate hike to be expected in the middle of 2019 at the earliest.
The minutes also highlighted the risks of the ongoing trade wars for the Australian economy and hence the dollar. The Central Bank pointed towards economic growth running at around 3% despite some headwinds coming from the housing market and weaker consumer confidence suggesting a reasonably positive outlook for the Australian dollar in the medium term.
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