Important events that may impact the AUD in October
The second half of October 2019 is full of financial and geopolitical events, many of which may have impacts upon the Australian dollar with the ebb and flow of global risk sentiment.(i) We have listed some of the most significant events for you to be aware of.
17-18 Oct: EU Leaders Summit will convene, and this will likely be the last chance for the UK to negotiate a deal before their 19 Oct deadline to vote on one(iii).
18 Oct: Chinese Q3 GDP and other economic data for September is released.
Chinese annual GDP growth for Q3 is expected to be 6.1%, towards the lower end of the 6-6.5% growth range targeted for 2019.(iv)(v)
18 Oct: US will impose tariffs on US$7.5b of EU goods after obtaining permission from the WTO.
These are as a consequence of illegal European government subsidies for Airbus, and as such airlines alongside whiskeys and some dairy products will be tariffed(vi).
19 Oct: The UK Government will need to have passed a Brexit deal through the House of Commons or win a vote from MPs to gain permission to leave without one.
If neither of these occur, by law Boris Johnson or the sitting Prime Minister will need to request an extension to the Brexit negotiations beyond the Brexit deadline of 31 Oct.(vii)
24 Oct: ECB meeting and rate announcement
30 Oct: US Q3 GDP released
US annual GDP growth for Q3 is expected to be 1.9%.(viii)
30 Oct: Federal Reserve meeting and rate announcement
As of 11 Oct, the market is currently pricing in a 76% chance that the target rate range is cut by 25bps.(ix)
31 Oct: Bank of Japan meeting and rate announcement
The BOJ is expected to cut their policy rate by at least 0.1%, to reach -0.2%. This would be the first time they have cut their interest rates since 2016. (x)
31 Oct: ECB Chief Mario Draghi’s term will conclude, to be replaced by Christine Lagarde
31 Oct: Brexit deadline, where the UK will either formally leave the EU or be forced to delay the leave date to allow for further negotiations.
For your free FX consultation or if you need more education on currency risks and hedging instruments, contact the Moneytech FX team, FX@moneytech.com.au or 1300 939 068.
(i) Rodda, K. (2019). The top 5 factors that affect the value of the Australian Dollar. [online] IG. Available at: https://www.ig.com/au/news-and-trade-ideas/forex-news/the-top-5-factors-that-affect-the-value-of-the-australian-dollar0-190520 [Accessed 11 Oct. 2019].
(ii)Trump, D. (2019). Twitter. [online] Twitter. Available at: https://twitter.com/realDonaldTrump/status/1171925717988388865 [Accessed 11 Oct. 2019].
(iii)BBC News. (2019). Johnson and Varadkar ‘can see pathway to a deal’. [online] Available at: https://www.bbc.com/news/uk-politics-49995133 [Accessed 11 Oct. 2019].
(iv)Cheng, E. (2019). China’s economic growth may be looking at another rough quarter. [online] CNBC. Available at: https://www.cnbc.com/2019/09/25/chinas-economy-may-be-headed-for-another-low.html [Accessed 11 Oct. 2019].
(vi)Lynch, D. (2019). U.S. can impose tariffs on $7.5 billion in goods because E.U. gave illegal subsidies to Airbus, WTO rules. [online] Washington Post. Available at: https://www.washingtonpost.com/business/economy/the-united-states-can-impose-tariffs-on-75-billion-in-goods-because-european-union-gave-illegal-subsidies-to-airbus-wto-rules/2019/10/02/021edc06-e51d-11e9-b403-f738899982d2_story.html [Accessed 11 Oct. 2019].
(vii)BBC News. (2019). Johnson and Varadkar ‘can see pathway to a deal’. [online] Available at: https://www.bbc.com/news/uk-politics-49995133 [Accessed 11 Oct. 2019].
(ix)CME Group. (2019). CME FedWatch Tool: Countdown to FOMC – CME Group. [online] Available at: https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html [Accessed 11 Oct. 2019].
(x)Leussink, D. and Kihara, L. (2019). BOJ keeps policy steady, signals chance of easing in October. [online] Reuters. Available at: https://www.reuters.com/article/us-japan-economy-boj/boj-keeps-policy-steady-signals-chance-of-easing-in-october-idUSKBN1W3310 [Accessed 11 Oct. 2019].