Aussie drops as RBA downgrades growth forecast


2019 growth slashed

At its quarterly Statement on Monetary Policy today the Reserve Bank of Australia slashed its GDP growth forecast for the year through June to 2.5% from 3.25% previously. For the year to June 2020 it cut its projection to 2.75% from 3.25% and sees 2021 growth at 2.75%. Unemployment is seen at 5.0% through 2019, unchanged from its current level. On inflation, it cut its headline CPI forecast to 1.25% and the core trimmed mean inflation to 1.75% from 2%.

Reiterating the tone from Governor Lowe’s speech on Wednesday, the statement said that the probability of a rate hike or cut are more evenly balanced than in the past, though the board does not see a strong case to move rates in the near term. However, they might lower rates if there was a sustained rise in unemployment or inflation got too low.


AUD/USD at 1-month lows

On balance, the Statement was viewed as dovish by the markets, with rates markets suggesting the chances of a rate cut by year-end are now just above 60%. AUD/USD fell accordingly, dropping to 0.7061, its lowest level since January 4. The 50% retracement of the January rally comes in at 0.7014.


AUD/USD Daily Chart

Source: OANDA fxTrade

Markets Get Lost In The Fog

Nothing to see, move along

It’s an almost barren data slate for the rest of the day, with Canadian employment data the only item that could spark a move. Economists are predicting a gain of 8,000 jobs on top of December’s 9,300, though the unemployment rate is seen edging up to 5.7% despite an unchanged participation rate of 65.4%.

Prior to that, German trade and current account data for December are likely to pass without incident, with expectations of a narrowing of the trade surplus to EUR18.4 billion from EUR19.0 billion in November.


The full MarketPulse data calendar can be viewed at


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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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