AUD RBA meeting, and GBP estimated GDP next

Australian monetary policy decision, 04:30 GMT

• Current 2.75%, expected 2.50%
• Rate cut, dovish stance: AUD Bearish
• Steady rates, hawkish stance: AUD Bullish
• Key pairs to watch: AUD/USD, AUD/JPY

The slowdown in the mining industry in Australia, has turned to be a major concern for the Central Bank. Earlier this week, AUD crashed after a speech of Governor Glenn Stevens, which left doors opened for a rate cut for this August meeting. But the slowdown marked by Stevens is not just in the mining industry: he also referred to the credit boom which let households borrow significant amounts to buy assets that rose in value, leading to unusually strong consumption that seems also to be over. 

The Reserve Bank of Australia has cut interest rates seven times since late 2011, hoping that lower borrowing costs will help bolster the economy, but has not succeed so far, despite slightly higher inflation. With the rate at 2.75% there is plenty of room to continue cutting: a minus 0.25% may not do much to a market that has already priced it in, but a 0.50% cut will be indeed shocking and se AUD selling off even further. Hard to believe is possible, a hawkish stance on the other hand may favor some temporal recoveries in the Australian currency, yet selling interest is expected to surge on moves higher.  

GBP and NIESR GDP Estimate, 14:00 GMT

• Previous, 0.6%
• Above expected: GBP Bullish
• Below expected: GBP Bearish
• Key pairs to watch: GBP/USD, EUR/GBP, GBP/JPY

The GDP Estimate released by the National Institute of Economic and Social Research is an estimate of growth over the last 3 months up to the report which comes out a month before the official announcement. In simple words, it predicts the quarterly government data. Due to its high reliability, the report is closely watched by traders; and with latest positive UK data giving support to Pound, expect the number to be a good market mover in this low volume days. A reading above expected should trigger further upward momentum in Pound against most rivals, while a negative one may see the currency suffering a kneejerk, although it will likely be short lived.