Best Exchange Rates

RBA Preview: Australian Dollar, Labour Market and House Prices in Focus

Categories: AUD, EUR, GBP, Markets, News, USD

At 2:30pm local time (GMT+11) on Tuesday, the Reserve Bank of Australia will announce its latest decision on interest rates. No change is expected to the RBA’s cash rate which has been held at a record low of 1.5% since August 2016, and therefore, once again, the spotlight will be shone on the RBA’s accompanying statement on monetary policy.

Since the RBA’s last meeting on September 4th, the Australian dollar has fallen 1.4% versus the US dollar, to rates on Tuesday morning close to $0.7825, and by 0.1% against the euro, to €0.667. Against the British pound, which has been ignited by hawkish rhetoric from the Bank of England, the Australian dollar has lost a hefty 4% since the RBA’s last meeting, to rates on Tuesday just below £0.59.

The past month’s wobble in the Australian dollar will please decision makers at the RBA, who in recent months have expressed unease about the Australian dollar’s mid-year climb. After the Aussie appreciated 10% against the US dollar between early May and late July, the bank added the following to their August and September statements:

“The higher [AUD] exchange rate is expected to contribute to the subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”

Perhaps to the disappointment of the RBA, in the long term the Australian dollar is heading in only one direction against the US dollar, according to Dutch bank ABN Amro. The bank expressed “strong conviction” in September when they forecast a rise in AUD/USD to $0.9 by the end of 2018.

UAUD/USD 3 Month Chart

Further to any mention of exchange rates, important messages in today’s RBA statement will likely relate to the domestic labour and housing markets.

In September, the RBA said that “forward-looking indicators point to solid growth in employment over the period ahead” but that Australia’s ongoing struggle with stagnant wage growth was “likely to continue for a while yet.”

Australia added an impressive 54,000 new jobs in August (data released mid-September); way above the market forecast for 17,500 jobs and July’s increase of 29,000.

The Australian Bureau of Statistics won’t release the Wage Price Index for the third quarter until November 14th. Wages in the second quarter had grown 0.5%, at an unchanged pace from that in the first quarter.

David Scutt of the Business Insider believes that recent data makes it “likely that the RBA will keep a similar assessment [on the labour market] today,” and that “if there is a change, it’s to express more confidence when it comes to the outlook for labour market conditions.”

Likewise, the RBA’s message on the housing market is unlikely to be much changed.

In September, the RBA said that “there are signs that conditions [in the housing market] are easing, especially in Sydney.”

Data on Monday from property researchers CoreLogic showed Sydney home prices falling for the first time in seventeen months, albeit by only 0.1%, and quarterly nationwide capital growth slowing to just 0.7% (this had been as high as 3.5% in December). Although prices in Melbourne are still climbing (+0.9% in September), CoreLogic data suggests that Australia’s overheated east coast property markets are starting to run out of gas, and this will please the RBA.

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product. Full Disclaimer

BER Newsletter

Subscribe for the latest exchange rates, currency news and special offers directly to your inbox.

Best Exchange Rates - We make it Easy to Compare Exchange Rates & Fees of Banks and Currency Exchange & Payment Providers

Level 2, AMP Tower, 50 Bridge Street, Sydney, NSW 2000, Australia

Disclaimer | Copyright | Privacy Statement


Best Exchange Rates is an information only service. By browsing on the website, using our comparison tools or FX provider referral service, you are asking Best Exchange Rates to provide you with information about currency exchange products & services from multiple financial institutions.

We will try to show you a range of products & services in response to your request for information. The search results do not include all providers and may not compare all features relevant to you. In giving you product information we are not making any suggestion or recommendation to you about a particular product.

If you decide to conduct foreign exchange you will deal directly with a financial institution, and not with Best Exchange Rates. Rates and product information should be confirmed with the relevant financial institution, see our terms of use for further details.

Best Exchange Rates may receive fees or other benefits in relation to activity on the Best Exchange Rates website. Best Exchange Rates may receive remuneration for vendor referral links. Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.

Read our Full Terms of Service


This website and its contents are the copyright of BEST EXCHANGE RATES PTY LTD © 2009-17. All rights reserved.

Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following. You may print or download contents to a local hard disk for your personal and non-commercial use only. You may copy some extracts only to individual third parties for their personal use, but only if you acknowledge the website as the source of the material.

You may not, except with our express written permission, distribute or commercially exploit the content. You may not transmit it or store it on any other website or other form of electronic retrieval system.

For more details or request distribution right please contacxt us here.