Market Update – 8th August 2018 – RBA Maintains Rates At 1.5%, But Inflation Is Coming In 2019-2020

A weaker US dollar, stronger commodities markets and a positive finish for European and U.S equities has helped the Aussie move higher against most of the majors and back above 0.7400 vs. the Greenback. The U.S Dollar Index came off around 20-30 points, while commodities and equities moved higher – commodities were well supported by higher prices for base metals Zinc, Copper and Nickel.

The RBA kept rates on hold yesterday at 1.5% while noting that GDP is expected to average a bit above 3% during 2018 and 2019. The concerns though remain the housing market and over indebtedness as a whole – “one continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high.” On the plus side the RBA noted that business conditions were generally positive in both non-mining industries and the resource sector which has continued to rebound. Overall inflation is likely to come in at a little under 2% but the RBA expected this number to grow through 2019 and 2020 – I would suggest the next rate hike will likely take place sometime in 2019 which at the time should be bullish for the Aussie dollar. In the interim expect more of the same and for AUD/USD to start with a 7 in the front of it.

AUD EXCHANGE RATES:

AUD/USD – 0.7402

AUD/GBP – 0.5711

AUD/EUR – 0.6374

AUD/NZD – 1.1013

AUD/JPY – 82.43

USD/BTC – $6,718

OTHER MARKETS: 

All Ords (XAO) – 6,340

Gold – A$1,631/oz

Silver –  A$20.71/oz

WTI – US$68.57/barrel

DATA RELEASES TODAY:

AUD – Home Loans m/m at 11.30am

AUD – RBA Governor Lowe Speaks at 1.05pm