Consumer confidence data today adds to recent economic data sluggishness
- Australia November building approvals -8.1% vs -1.0% m/m expected
- Australian Q3 GDP +0.4% vs +0.5% q/q expected
- Australia October trade balance +A$4502m vs +A$6500m expected
- Australia October retail sales 0.0% m/m vs +0.3% expected
- Australian business confidence 0 (vs. prior 2) & business conditions 4 (3)
- Australia Westpac Consumer Confidence Index for Dec: -1.9% m/m (prior +4.5%)
The RBA will next meet on 4 February next year. But they may very well have to quickly turn away from their December messaging and lean towards cutting its cash rate by another 25 bps when the time does come.
The recent slew of data from the land down under (⬆️) hasn't been encouraging to say the least and it continues to run against the RBA message that the rate cuts this year are having some impact in curtailing a further economic slowdown.
Add to the fact that the US-China trade limbo looks set to be prolonged, it makes for a cloudy outlook (no pun intended) over the coming months - despite the RBA stressing that it needs more time for lower rates to transmit to the real economy.
Australian yields have taken in some comfort in recent months over the RBA not overly extending rate cuts into next year. However, if economic headwinds continue to blow strongly, it's only a matter of time before we see more rate cuts and perhaps QE.
In that lieu, the path of least resistance for the aussie looks to be lower.