Data Dependent

Local investors are looking at subdued trading today ahead of key market events this week. US shares fell after European gains, commodities are mixed and the USD lifted overnight despite some weaker US data. And by way of marking history as it's made, the Chinese Yuan entered the IMF SDR basket of currencies, making it an official global reserve currency.

By Michael McCarthy · 1 Dec 2015

By Michael McCarthy ·
1 Dec 2015

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Local investors are looking at subdued trading today ahead of key market events this week. US shares fell after European gains, commodities are mixed and the USD lifted overnight despite some weaker US data. And by way of marking history as it’s made, the Chinese Yuan entered the IMF SDR basket of currencies, making it an official global reserve currency.

The RBA is not expected to move rates at its meeting today, but some inflation focussed analysts are pointing to the potential for a shift in language towards easing. This would likely support shares and see the AUD slip back below 72 US cents. However, given Governor Stevens “chill out” comments, and the clear indication of data dependency, no change and no impact remains the favoured runner.

Ahead of the afternoon call from the central bank, investors have a manufacturing index, October building approvals and Q3 net exports to consider. Yesterday’s stronger than expected inventory data means any increase in net exports beyond the forecast 1.2% will have economists increasing their estimate of the 2.3% increase in GDP released tomorrow.

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Frequently Asked Questions about this Article…

Why are local investors experiencing subdued trading today?

Local investors are experiencing subdued trading today due to anticipation of key market events happening this week, which is causing a cautious approach in the market.

How did US shares perform recently and what influenced their movement?

US shares fell recently despite gains in European markets. This movement was influenced by mixed commodities and a stronger USD, even though some US data was weaker.

What is the significance of the Chinese Yuan entering the IMF SDR basket?

The Chinese Yuan entering the IMF SDR basket is significant because it marks the Yuan as an official global reserve currency, highlighting China's growing influence in the global economy.

What are analysts predicting about the RBA's interest rate decision?

Analysts are not expecting the RBA to change interest rates at its meeting today. However, some inflation-focused analysts suggest there might be a shift in language towards easing, which could support shares and cause the AUD to slip.

What economic data should investors watch ahead of the RBA's announcement?

Investors should watch the manufacturing index, October building approvals, and Q3 net exports data ahead of the RBA's announcement, as these could influence market expectations.

How might stronger inventory data affect GDP estimates?

Stronger than expected inventory data could lead economists to increase their estimates of GDP growth, especially if net exports exceed the forecasted 1.2% increase.

What impact could a shift in RBA language towards easing have on the AUD?

A shift in RBA language towards easing could lead to a decrease in the AUD, potentially slipping back below 72 US cents, as it would signal a more accommodative monetary policy.

Why is the term 'data dependency' important for investors right now?

The term 'data dependency' is important for investors because it indicates that central banks, like the RBA, are basing their decisions on current economic data, which can influence market movements and investor strategies.