Weaker commodity prices and a stronger US dollar has the Australian dollar pinned to the mat. The trading towards ten-year lows comes at a crucial time for the Reserve Bank of Australia as it meets today.
Expectations for an interest rate cut in Australia are muted after the back-to-back cuts in June and July. However the inventory component of the national accounts shocked with a 0.9% drop in the second quarter. This has some analysts predicting a negative number when GDP data is released tomorrow, a development that could shift the RBA’s thinking. However the stimulatory impact of the lower Aussie should be enough to stay the board’s hand today.
European stocks lifted overnight in the absence of US trading. Official news sources in China signalled preparation for an extended trade engagement with hints the World Trade Organisation may be asked to adjudicate. US futures are once again under pressure in thin out of hours trading despite the White House’s insistence that trade talks are on track. Markets in Shanghai and Shenzhen ignored the downdraft yesterday. A repeat performance today could lift the region.
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