H1 forecast slashed

In its Statement on Monetary Policy released this morning, the Reserve Bank of Australia trimmed its 2020 growth forecasts to reflect the impact of the recent drought, bushfires and the outbreak of the coronavirus.

The RBA slashed the June 2020 GDP growth forecast to 1.9% from 2.6% previously, while the December forecast was trimmed to 2.7% from 2.8%. Looking further ahead, it raised both the June and December 2021 forecasts to 3.1% from 3.0%. The bank mentioned that its estimates were based on a technical assumption of one 25-bps cut to its benchmark rate in mid-2020. Market pricing currently assigns a 51% probability of a rate cut at the June meeting.

There was only one small adjustment to inflation forecasts, with the June 2020 core inflation outlook reduced to 1.75% from 2.0% previously.

The Australian dollar traded softer after the statement, losing 0.15% versus the US dollar and 0.33% versus the Japanese yen. AUD/JPY is retreating from the 200-day moving average at 74.418, which has capped prices since January 27.


AUD/JPY Daily Chart

Source: OANDA fxTrade


Coronavirus update

Unconfirmed rumours are circulating that the city of Shenzen, just across the border from Hong Kong, is in lockdown due to the coronavirus. The number of global cases of the virus continues to rise, reaching 31,472 this morning, with 31,162 of them located in mainland China. Japan’s reported cases jumped after more victims quarantined on a cruise ship were diagnosed. The Japan total is now at 86, second in the cases league table.  The number of virus-linked deaths has hit 638, with still only two reported outside of the Chinese borders (Source: John Hopkins University).


China’s trade data pending

China’s trade numbers for January are due anytime, with economists expecting a drop in both exports and imports due to the timing of the Lunar New Year break this year. Estimates suggest imports fell 6.0% y/y while exports slid 4.8%. As a result, the trade surplus is seen narrowing to 38.6 billion from $47.2 billion.


Nonfarm payrolls in focus

The US economy probably added 160,000 jobs in January, according to the latest survey of economists, more than the 145.000 recorded in December. Robust PMI data and an improvement in the employment index (up to 46.6 from 45.2) within the ISM manufacturing PMI might suggest the upside may be vulnerable this month, not forgetting the blowout in the ADP number last Wednesday. The unemployment rate is seen unchanged at 3.5% while average hourly earnings are expected to rise 0.3% from a month earlier, an acceleration from the 0.1% gain seen in December.


For the European session, the focus will be on German industrial production and trade data for December. The former is seen falling 0.2% m/m while for the latter, both imports and exports are expected to show a rebound from the previous month, rising 0.2% and 0.5%, respectively.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD hovers above multi-year lows amid coronavirus fears, ahead of ZEW

EUR/USD is trading just above 1.0820, the lowest since 2017, as the coronavirus outbreak is taking its economic toll on Apple among others. The German ZEW Economic Sentiment figure is eyed.


GBP/USD extends losses to sub-1.3000 area, UK unemployment rate in focus

GBP/USD stays mildly negative just below 1.30 while heading into the London open on Tuesday. UK’s Brexit negotiator shares the same view as PM Boris Johnson, increases the risks of hard departure. UK employment statistics will be the key to clarify on the BOE’s bearish bias.


Forex Today: Coronavirus takes a bite from the apple, Gold gains, Bitcoin bounces

The coronavirus outbreak's economic impact is growing as Apple, the iPhone maker has issued a warning that it is unable to meet its guidance due to production and issues and closed stores in China. The tech giant's announcement has been weighing on the market mood, pushing gold and the yen higher. 

Read more

Gold: Positive beyond six-week-old falling trendline

Gold prices take the bids above $1585, +0.35%, during the pre-European trading on Tuesday. The yellow metal recently broke a downward sloping trend line stretched from January 08. Early-month top on the buyer’s radar.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors