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Australian inventories bodes well for Wed Aus Q2 growth figures- ANZ

FXStreet (Bali) - ANZ reviews yesterday's upbeat Australian inventories, adding that they expect the current account deficit - published today - to widen to AUD14.8bn, while anticipating no change in policy by the RBA.

Key Quotes

"Yesterday, in Australia inventories rose a strong 0.8% q/q in Q2, stronger than both our own and market expectations (ANZ: +0.5%; Mkt: +0.3%), implying that private non-farm inventories added around 1ppt to growth in Q2. While company profits fell 6.9% q/q in Q2, which was weaker than both our and the market's expectations (ANZ: -4.5%; Mkt: -2.0%), the measure of company profits closer to the national accounts measure of private non-financial profits fell a more modest 1.5% q/q which is actually stronger than what we had pencilled in. These data together suggest some upside bias to our Q2 GDP growth forecast of +0.4% q/q, although we will firm up this estimate after the volatile public demand and net exports figures are published today at 11:30AEST."

"We expect the current account deficit to widen to AUD14.8bn from AUD5.7bn (mkt: -AUD14.0bn) and net exports to have been around a 0.8ppt drag on growth in Q2 (mkt: -0.7ppts). Prior to that, at 9:30AEST, ANZ-Roy Morgan consumer confidence data are released."

"We anticipate no change in policy from the RBA at today’s board meeting, but we expect the post Board meeting statement at 14:30AEST to note the upgrade to non-mining firms’ investment intentions from this week’s CAPEX report and possibly the improvement in business confidence and conditions. Although we don’t expect any significant changes, the language around the setting of policy will, as always, be important."

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