Daily Commentary BY THE CURVE TEAM –

Geopolitical Tension and Anticipated Updates

14th of September, 2020

Geopolitical tension is again at the fore as multiple data and RBA updates are released this week.

Tension between China and Australia continues to simmer. Last week it was reported that two Australian journalists negotiated their release from China after threats of detainment.

Today it is being reported that a Chinese data company whose clients include the communist party has profiles of many well-known Australians. The company mentions manipulation of public opinion via online platforms to achieve a certain agenda as being one of its mandates.

In and of itself these reports do not have immediate consequences. Given the reliance Australia’s economy has on China, the political relationship will continue to be monitored very closely especially after tensions have escalated since the start of the pandemic.

Thus far, the economic consequences from the political tensions has been minor. Barley and wine have been hit as China has claimed the industries have undercut prices when exporting to China. But Australia’s second biggest export, iron ore, has continued to be bought in abundance by China, especially as China’s economy has recovered since March.

Should iron ore exports and other noteworthy exports, for example education and tourism, be impacted by the political tensions, it has the potential to dent Australia’s economy.

This week there will be key data and RBA updates. Tomorrow we will get updates on house prices for the quarter, which will draw the interest of many.

Tomorrow the RBA minutes for the September meeting will be released. The expansion and extension of the Term Funding Facility makes the release highly anticipated. Any indication of further policy changes next month will be looked for.

Finally, employment data will be released on Thursday. The impact of the Victorian lockdown will be on show with these numbers.

Josh Stewart

Client Relationship Manager