Reserve Bank of Australia Governor over the weekend speaking at the Jackson Hole Symposium revealed his concerns with regards to the effect Central Banks can have on the economy, pointing to the fact that they cannot solve all the problems.
Lowe suggested that part of the problem facing the global economy is that political shocks are turning into economic shocks and the choices Governments are making are having more of an effect just simply domestic change.
Moreover, Lowe argued that members of the public cannot expect central banks to bail them out of poor decisions that the government make. The current trend of emotionally charged politicians getting into power as opposed to economically sound leaders will eventually start to take its toll more.
The RBA (Reserve Bank of Australia) have already made cuts to the interest rate in Australia and the rhetoric from Lowe over the weekend suggests there is very little that they can do to change some of the pressures.
The Australian economy is very much at the mercy of the US China trade war with, with China being their main trading partner. Any effects on Chinese output always have a knock-on effect to the Australian economy so a de-escalation or resolve to the trade war will be key for Australia.
From a currency perspective over the weekend the GBP/AUD interbank rate climbed to 1.835 which is the highest for two months, this was on the back of Trump announcing further tariffs on China and then the Chinese retaliating with $75bn of their own. Should this continue it’s difficult to see the Australian Dollar finding much support.
There is little new data out this week for the Aussie with the only major release coming on the Friday with Building Permits, whilst it is quiet on the data front there is much taking place that might affect the value of the Australian dollar, you may wish to be in touch with your account manager to for the latest currency updates.
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