The best guess of Reserve Bank of Australia is that the economy’s growth in September will end Australia’s recession.
At senate estimates on Tuesday, RBA deputy governor Guy Debelle said Victoria’s 12-week lockdown would not hinder the nation’s recovery from its first economic recession in over three decades.
“Our best guess is it looks like the September quarter for the country recorded positive growth rather than slightly negative,” Dr. Debelle said.
“As best as we can tell, the growth elsewhere in the country was more than the drag from Victoria, and possibly the drag from Victoria was a little less than what we guessed back in August.”
The RBA is expecting gross domestic product (GDP) for the September quarter will track positive, following its steep fall in the previous quarter by 7 percent.
A technical recession is two consecutive quarters of negative GDP growth.
Dr. Debelle said government spending would need to continue until unemployment levels were “comfortably” below 6 percent, noting a premature tapering of economic aid would hinder recovery efforts.
The RBA is expected to reveal at its board meeting next Tuesday if it will further cut interest rates to alleviate pressures facing the economy.
A number of economists believe the central bank will slash the cash rate to 0.1 percent and implement further quantitative easing measures to help lift the economy.
When questioned by Labor senate Katy Gallagher on the pandemic’s negative impact on wage growth, Dr. Debelle said getting people back into the labour market should be more of a priority than if wages were expected to rise in the near future.
“The main objective is to get people back into employment,” Dr. Debelle said.
The central bank said regions such as Far Northern Queensland, which are heavily reliant on overseas tourism, will likely struggle while international borders remain closed.
Dr. Debelle said services sectors such as entertainment would continue to be affected by the pandemic, while construction and industrial sectors were experiencing increased demand.
The RBA is expected to release new economic forecasts next Friday in its quarterly statement on monetary policy.
In the daily charts of AUD/USD, the pair edged up early Wednesday morning in Sydney session.
The pair edged up 0.03% to 0.7130. The AUD’s gains were capped by data showing that Australia’s Consumer Price Index (CPI) rose 1.6% quarter-on-quarter during the previous quarter, higher than the 1.5% predicted forecasts.
The Reserve Bank of Australia is also tipped to announce lower interest rates and increased government debt purchases after its next meeting on November 3.
As what we can see in the daily charts, the pair is still trading inside the support level at 0.6995 and resistance level 0.74129. The Aussie dollars strength may be backed up by the weakening of the dollar due to the uncertainty of investors that is caused by the upcoming U.S. Presidential Elections. Further analysis is needed and always proceed with pre-caution in trading pairs related to the U.S. dollar. Volatility spikes may be experienced in the coming trading days.
Don’t forget to follow and subscribe for more updates about market trends, analysis, forex news, strategies and more!
Do you want to learn more about forex trading? Sign up now on our FREE forex webinar and reserve your FREE seats while it still lasts!
General Advice Warning
Learn to Trade Pty Ltd (ACN:138178542, AFSL:339557) provides general information and educational courses and materials only. This is not an offer to buy/sell financial products. We do not provide personal advice nor do we consider the needs, objectives or circumstances of any individual. Financial products are complex and all entail risk of loss. Over-the-counter derivative and foreign exchange products are considered speculative because they are highly leveraged and carry risk of loss beyond your initial investment, hence should only be traded with capital you can afford to lose. Please ensure you obtain professional advice to ensure trading or investing in any financial products is suitable for your circumstances, and ensure you obtain, read and understand any applicable offer document
The information contained herein (“Content”) has been prepared and issued by Learn to Trade Pty Ltd (LTT), and all intellectual property relating to the Content vests with LTT unless otherwise noted. The Content is provided on an as is basis, without warranty (express or implied). Whilst the Content has been prepared with all reasonable care from sources we believe to be reliable, no responsibility or liability shall be accepted by LTT for any errors or omissions or misstatements howsoever caused. No guarantees or warranties regarding accuracy, completeness or fitness for purpose are provided by LTT, and under no circumstances will any of LTT, its officers, representatives, associates or agents be liable for any loss or damage, whether direct, incidental or consequential, caused by reliance on or use of the Content.