-Westpac
This week the RBA will have a great opportunity to clarify its view of the economy, as it differed during the last several statements. First it changed to a slightly hawkish, however, later, in order to dampen Aussie's appreciation Glenn Stevens tried to talk it down. On Wednesday, a report from Australian Bureau of Statistics showed a sluggish growth in the retail sector, while next report will be published a day later and will reflect the situation in the labour market, which is likely to deteriorate. These two reports will most likely be cited on Friday, when the RBA will unveil its monetary policy statement.
For now, the Aussie moved slightly lower on the back of disappointing retail sales figures, with the AUD/USD pair falling to 0.9331. Sales at Australian retailers climbed only 0.1% in March, missing analysts' expectations for a 0.4% growth and slowing from a revised 0.3% expansion a month earlier. The main upside pressure came from food sales, both at supermarkets and cafes and restaurants, both posting a 0.5% and 1.8% growth respectively. While sales of newspapers posted solid gains, other parts of the household good sectors declined. On a quarterly basis sales climbed 1.2% versus a projected 1.5% increase. The easing cycle is over, the RBA has made it clear. The recovery, however, remains patchy, and mostly led by a surge in house prices, while both companies and consumers are still reluctant to spend more.
© Dukascopy Bank SA