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Will the RBA cut ? AUD under pressure as its big day arrives.

Published May 7, 2019

Author:Steve Oram

Continued pressure on the AUD following President Donald Trump’s recent threats to raise tariffs on 200 billion of Chinese goods to 25% on Friday.

Comments surprised markets as they’ve shifted from Trump’s recent upbeat tones that trade talks were progressing well, with a top US trade negotiator now accusing China of reneging on promises made during negotiations. China hasn’t commented on Trump’s tariff threats and will proceed with scheduled trade negotiations with the US starting on Wednesday in Washington.   Commodity currencies and global stocks fell on Trumps announcement casting more doubt on trade talks.

The Euro has held steady with small signs of optimism. Germany’s services PMIs came in slightly better than expected, and an investor confidence survey was very positive, March retail sales also suggest improved growth.

Focus today will be on the RBA rate announcement released at 2.30pm with a 50% chance the RBA could cut rates to 1.25% from 1.5% . If they don’t move then the statement will be studied keenly as most expect now its a question of when not if!

Prior to that this morning we also have Retail Sales and Trade Balance data at 11:30am, though that information may already be too late if the board members have made their decision.