Weekly Asset Heatmap

Weekly Asset Heatmap: Australia

Predata's signals suggest a big move in the Aussie FX and Australian 10-yr yields in the coming weeks.

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Our Reserve Bank of Australia signals point toward a big move in the Australian dollar and 10-yr yields in the next two weeks.

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Salient threads in the digital debate over Australian monetary policy that are driving these signals include:

  • The Reserve Bank of Australia sounded rather dovish in its recent rate statement; the central bank reiterated that high household debt was a source of risk and that a strong AUD was weighing down the country's output and employment figures.
  • Though iron ore demand from China has not slowed, an increased amount of Chinese steelmaking capacity is going unused as part of a national effort to reduce air pollution during winter. Last week, the RBA wrote that China's sacrificing of production to limit pollution was probably a lasting trend.
  • The ongoing Australian citizenship saga, in which several parliamentarians may be found ineligible due to dual citizenship, is causing uncertainty in domestic politics

    Chinese interest in Australian higher education is a key housing market indicator.

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    Predata's “Australian Tertiary Education Interest” signal comprises Chinese-language social and collaborative media sources related to top Australian Universities, their cities, and key landmarks — all things a parent may pay attention to when deciding where to send their child for higher education. Spikes in the signal often precede a jump in home sales in both Sydney and Melbourne. Recently, the signal has been driven by sources related to Melbourne — which might in part explain the recent divergence between the Sydney and Melbourne housing markets.

    Concerned that debt-fueled speculation was causing the market to overheat, the RBA tightened lending rules, which, in Sydney at least, have helped to put the brakes on rising prices. But for now it seems Chinese buyers need not worry Australia will go the route of New Zealand, which has banned foreigners from buying property as a step to address a housing shortage.

    How will China's renewable energy future affect Australia?

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    At the Chinese Communist Party Congress in October, Xi Jinping announced China's economy would begin transitioning from a period of rapid growth to one of “high-quality growth.” Part of that agenda is renewable energy and clean technologies. Accordingly, our signal that tracks Chinese attention to renewable energy (above) has been rising. This transition will affect Australia, which is a major raw commodity exporter to China. Researchers have noted that if China were to accelerate energy efficiency in metals, Australian coal exports would plummet.

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