After Australian Q2 GDP release had been published, it became clear that expectations of economists were almost fully justified: the 0.5% quarterly expansion was slightly off the 0.6% pace predicted, on top of this, the year-over-year expansion was at the 4-year high of 3.3%. Bearish reaction of speculators was predefined since the RBA is still expected to be dovish in the forthcoming future.
Although Australia showed 100 quarters without a recession, domestic demand in Western Australia fell by 2.5%, households carry on massive debt loads and the economic picture may deteriorate, because the mining boom is over.
According to the recent data of the Australian bureau of Statistics released earlier today, after seasonal adjustments, the trade deficit of Australia narrowed to $2.41 billion. In addition, the value of exports increased by 3% to $26.214 billion, thanks to a hefty contribution from non-monetary gold exports.
AUD/USD rose to 0.7700 on the news. Strong national currency is believed to be a primary cause of concerns for Australian central bank. A possible reduction of the interest rates can be viewed as a very effective pill for the sluggish Australian economy. Therefore, despite Glenn Stevens’s decision to leave the RBA’s interest rates unchanged, we may expect the opposite move from the RBA in the months ahead, according to some economic experts. September meeting of the Reserve Bank of Australia was the last for Stevens as its governor: from now on he will be replaced by the deputy governor Philip Lowe.