Market Analysis

Aussie Dollar Bears May Be Amazon Primed

Thanksgiving Day celebrations will pre-occupy US traders today but down under, aside from the start of the Ashes series in cricket, it may well be the imminent launch of Amazon Australia that grabs headlines. Expected to launch on November 24, at the start of the retail extravaganza that is Black Friday, by bearing down on prices paid by consumers down under the launch of Amazon Australia is likely to have a disinflationary impact on Australian inflation data.

Keeping that in mind, it’s worth casting the mind back to the Reserve Bank of Australia’s (RBA) minutes from their November 7 meeting where the policymakers agreed that “retail price inflation had been low as competitive pressures in the retail sector had continued to restrain price rises.” And that was the case even before the coming arrival of Amazon Australia on the scene. To the extent that the emergence of new disinflationary pressures in Australia’s retail sector could adversely affect market estimates for when the RBA might raise rates next year (from the current 1.5 per cent), traders could conclude that the Australian Dollar (AUDUSD, EURAUD, AUDNZD), might run into a new headwind.

Written by Neal Kimberley, External Currency Analyst.