As expected, the Reserve Bank of Australia kept the main interest rate at 0.25 percent at its October meeting. Thus, the earlier market assumptions about interest rate cuts have been put off, which may favour the Australian dollar in the long run.
The decision-makers reaffirmed their attitude to supporting the labour market, household income and Australian businesses. Thanks to previous decisions of the RBA to counteract the negative effects of the epidemic, the economic situation of the country seems to be stabilizing. Nevertheless, the central bank representatives continue to wonder whether further monetary policy loosening could support the labor market.
The bank's management confirmed that the current monetary policy conditions will be maintained as long as necessary. Thus, the main interest rate will remain at a record low level until progress towards full employment. Inflation, in turn, is expected to remain in the range of 2-3 percent. Australia is expected to announce a deficit of 220 billion Australian dollars when the delayed budget for the fiscal year ending June 2021 is handed over. The deficit will correspond to 11.6% of gross domestic product, according to the median estimates of the surveyed economists.
German factory orders beat forecasts
The German data showed a stronger-than-expected increase in factory orders in August, which increased hopes for a faster recovery in Europe's largest economy, despite the revival of the Covid-19 epidemic.
However, the German stock exchange index remained above the Monday closing only for a while, and then declined by about 0.3 percent.
USA waits for aid package
Investors seem to expect more news about the health of President Donald Trump, who left the hospital on Monday to continue his treatment at the White House.
The fate of the aid package for the American economy remains uncertain. It is very much needed at this point in time, as most states in the USA have a worsening trend in the number of Covid-19 infections, the coronavirus is spreading in most of the country, Bloomberg agency said.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
