When is the RBA Minutes, Australia Wage Price Index and how could they affect AUD/USD?

Early Tuesday morning in Asia, at 01:30 GMT, the Reserve Bank of Australia (RBA) will release its minutes of the latest monetary policy meeting held in August. At the same time, the Australian Bureau of Statistics will also release the second quarter (Q2) Wage Price Index data and will keep the AUD/USD traders busy.

Furthermore, China Industrial Production and Retail Sales for July will be out by around 02:00 AM GMT and making Tuesday even more important for the AUD/USD pair traders.

The Australian central bank kept the benchmark interest rate unchanged for the second consecutive meeting in August after lifting the benchmark interest rate in the previous two consecutive monetary policy meetings.

Given the latest defense of the RBA’s status quo by Governor Philip Lowe, as well as the readiness to lift the rates if needed, the AUD/USD bulls will be interested in hawkish language of the Minutes.

Apart from looking at the catalysts that justify the RBA’s status quo in the last monetary policy meeting, the Q2 Australia Wage Price Index, expected 1.0% QoQ versus 0.8% prior, will also be important for the AUD/USD pair traders to watch.

Following that, China’s July monthly Retail Sales and Industrial Production for July, expected 4.8% and 4.5% YoY versus 3.1% and 4.4% previous readings, will be entertaining the AUD/USD traders.

Ahead of the event, Analysts at ANZ said

We expect a 0.9% q/q increase in the Wage Price Index, with the yearly increase to print at 3.7%. The ongoing tightness in the labour market, public sector wages now moving higher and a lift in wage increases paid under enterprise bargains all point to a q/q lift in wages growth. Working a little against that is the general stability in the WPI reflecting the nature of the measure. Q3 should see a much larger increase in the WPI (reflecting the Aged Care Work Value case and the minimum award wage increase).

How could the minutes affect AUD/USD?

AUD/USD portrays the typical consolidation ahead of the key catalysts as it makes rounds to 0.6490-80 while probing the late Monday’s corrective bounce off the yearly low. In doing so, the Aussie pair also struggles to justify the mixed signals from the US inflation expectations and the firmer US Treasury bond yields.

That said, the RBA has already put down its weapons after two hawkish surprises. However, the policymakers, including Governor Lowe, also cited the monetary policy action as a ‘decisive’ one and showed readiness for further rate hikes. Hence, Aussie pair buyers will especially look for the hawkish signals from the statement, suggesting more numbers of policymakers favoring the rate hikes.

Furthermore, upbeat wage growth in Australia may also back the RBA’s readiness for rate hikes and can trigger the AUD/USD pair’s recovery from the multi-day low.

Also on the economic calendar are the top-tier data from Australia’s biggest customer China and hence any weakness in the Industrial Production and Retail Sales for July will be closely observed amid fears of losing economic momentum in the world’s second-biggest economy.

It’s worth mentioning that the US Retail Sales for July is also on the calendar for release and hence the market’s reaction to the RBA Minutes will be limited ahead of the US data.

Technically, the AUD/USD recovery remains elusive below June’s bottom of around 0.6600. However, a clear downside break of May’s monthly low, close to 0.6460, becomes necessary for the sellers to tighten their grips.

Key Notes

AUD/USD Forecast: More losses likely while under 0.6500 

AUD/USD stays defensive around 0.6500 as RBA Minutes, China/US statistics loom

About the RBA minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

About Australia Wage Price Index

The Wage Price Index released by the Australian Bureau of Statistics is an indicator of labor cost inflation and of the tightness of labor markets. The Reserve Bank of Australia pays close attention to it when setting interest rates. A high reading is positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).

About China Retail Sales and Industrial Production

China’s National Bureau of Statistics (NBS) releases the Retail Sales and Industrial Production figures for a month after nearly two weeks from its end.

Retail Sales measures the total receipts of the retailed consumer goods. It reflects the total consumer goods that the various industries supply to the households and social groups through various channels. Further, Industrial Production shows the volume of production of Chinese Industries such as factories and manufacturing facilities. A surge in output is regarded as inflationary which would prompt the People’s Bank of China would tighten monetary policy and fiscal policy risk. 

Generally speaking, high readings of the industrial production growth and Retail Sales may generate a positive sentiment (or bullish) for the CNY (Chinese Yuan), whereas a low reading is seen as negative (or Bearish) for the CNY.