Bell FX Currency Outlook: Retail spending finished Q2 off softly, reflecting the Budget-related fall in consumer confidence and a warmer-than-usual start to winter. The AUD bounces off higher at the open at .9332 against the USD.
Australia: While the bounce back in retail spending in June was stronger than expected (+0.6% m/m; mkt: +0.3% m/m), more than retracing May'sweak outcome (revised up 0.2ppts to 0.3% m/m), retail spending rounded out the quarter only moderately higher in nominal terms.
Meanwhile, in volume terms, retail sales fell 0.2% q/q in Q2. These data suggest consumer spending would have contributed little to overall GDP growth in Q2 (although growth in services spending would have likely offset some of this weakness). Job advertisements rose 0.3% m/m in July, building on June's gains to be only modestly lower than three months ago.
Looking through the recent volatility and despite the recent softness, job ads remain around 6% higher than six months ago, suggesting labour demand has very gradually improved. In Australia today, the key event will be the RBA Board meeting at 14:30AEST.
The market expect the RBA to leave the cash rate on hold at 2.5%.
Majors: The USD consolidated the losses suffered after the weaker than expected payrolls report last week. Sterling also outperformed on the day,having reported a better than expected and still very strong Construction PMI for July.
The market does not expect any revision to the preliminary Euro-zone services (54.6) and composite (54.0) PMIs tonight. Euro-zone June retail sales are also scheduled and expected to show 0.5% monthly growth. The UK releases their Services/Composite PMIs too for July.Economic Calendar05 AUG AU Trade Balance JunCH HSBC Services PMI JulAU RBA Cash Rate AugUS ISM Non-Manufacturing Composite Jul
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