Focus of Tuesday's session was on RBA interest rate decision and the following statement. At its meeting today, the RBA Board decided to leave the cash rate unchanged at 1.50 per cent. The recent inflation data were broadly as the Bank expected. Both CPI inflation and measures of underlying inflation are running at a little under 2 per cent. Inflation is expected to pick up gradually as the economy strengthens. Higher prices for electricity and tobacco are expected to boost CPI inflation. A factor working in the other direction is increased competition from new entrants in the retail industry.
The Australian dollar has appreciated recently, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast. The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
Wednesday's session brought Australian Building Approvals figures. The trend estimate for total dwellings approved rose 0.1% in June after falling for three months. The seasonally adjusted estimate for total dwellings approved rose 10.9% in June following a fall of 5.4% in the previous month. The trend estimate for private sector houses approved rose 0.8% in June and has risen for four months. The seasonally adjusted estimate for private sector houses rose 3.4% in June and has risen for three months.
Thursday's session was marked by Australian Trade Balance figures. In trend terms, the balance on goods and services was a surplus of $1,166m in June 2017, a decrease of $409m on the surplus in May 2017. In seasonally adjusted terms, the balance on goods and services was a surplus of $856m in June 2017, a decrease of $1,168m on the surplus in May 2017.
Friday's session brought Australian Retail Sales figures. The trend estimate rose 0.4% in June 2017. This follows a rise of 0.4% in May 2017 and a rise of 0.4% in April 2017. The seasonally adjusted estimate rose 0.3% in June 2017. This follows a rise of 0.6% in May 2017 and a rise of 1.0% in April 2017. In trend terms, Australian turnover rose 3.6% in June 2017 compared with June 2016. The following industries rose in trend terms this June 2017: Household goods (0.9%), Food retailing (0.2%), Other retailing (0.5%), Cafes, restaurants and takeaway food services (0.4%), Clothing footwear and personal accessory retailing (0.2%), and Department stores (0.3%).
This week markets will be looking at:
NAB Business Confidence (Tuesday 3:30)
China's Trade Balance (Tuesday)
China's CPI/PPI (Wednesday 3:30)
