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AUD

Aussie at one-month lows as RBA downgrades growth, CPI

The AUD dropped to the lowest levels since last month’s flash crash on Friday after the Reserve Bank of Australia downgraded its forecasts for GDP growth and inflation.

For the 2018-19 financial year, GDP growth was downgraded from 3.25% to 2.50% while the inflation forecast was downgraded from 2.00% to 1.25%

The AUD might be vulnerable over the next six months if inflation is reported in line with the RBA’s forecasts. This would be a sizeable drop from the most recent 1.80% reading.

The next inflation report is due in late April.

The downgrade came after the RBA warned last week that the next move in interest rates might be down.

Late bounce

The AUDUSD bounced from the early lows to end down 0.2%.

The Aussie was weaker in most other markets with the AUDEUR down 0.1% and the AUDJPY down 0.2%

Delayed data due

The focus this week remains on the US with key data due to be released that was delayed by the government shutdown.

US inflation is due on Wednesday night while retail sales is released on Friday.

Locally, the calendar is dominated by business and consumer sentiment, due on Tuesday and Wednesday respectively.

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