Australia GDP Numbers And Housing Effect

Australia is set to release its latest GDP numbers on Tuesday night. This is always an important event for the currency markets, but with all the talk about the housing crisis down under, it’s likely to hit the market a little harder this time around.

There are good reasons to think this might be an unusually poor report, but that the economy might already be recovering. Mind you; this is for the fourth quarter, so even though the data itself is old, its importance to the markets is how it sets up prospects. Plus, it gives us a comparable for what’s going on in the Australian economy right now.

With the RBA projected to cut rates in the near future, this is a key bit of data that analysts are going to be putting into their equations when it comes to the timing of upcoming monetary policy.

Schedule and Expectations

The GDP data will come out on Wednesday at 01:30 CET (or Tuesday 19:30 EST), just after RBA governor Lowe gives a speech. Depending on how long he talks, the events could overlap.

The markets focus on the q/q data, though the y/y is generally more referenced when it comes to policy decisions. The consensus among economists is that Australia’s GDP grew by 0.2% in the last quarter, which would be a slip from the 0.3% of the third trimester. This would imply a cumulative growth of 2.2% for 2018 and a drop from the annualized figure of 2.8% recorded in September.

We should note that 2.2% is still lower than the expectations of the RBA, last expressed by the governor as “a bit below 3%.”

Market Behavior

Let’s get the other event of the day out of the way: Governor Lowe speaking at the annual Financial Review business summit. This will start on Tuesday at 23:10 CET (or 17:10 EST) and is not expected to be specifically about monetary policy (it’s more of a “review”).

Without any policy mentioned, it would be a reiteration of the content of the SMP issued last month. Of course, a deviation from the script would have an impact on the markets, but since we can’t read his mind, it’s hard to know ahead of time.

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