August 19, 2010
The Aussie got a huge bear hug from currency traders yesterday. It erased the gains it made on Tuesday when it closed 162 pips lower at 0.8893. Bear hug… Haha! I crack myself up! But enough of my oh-so-funny quips. Let me give you the lowdown on the Aussie’s bad day.
It was off to a bad start with a few to not-so-stellar economic reports from Australia. According to the Australian Bureau of statistics, the wage price index for the second quarter fell short of the 0.9% forecast when it printed at 0.8%. The disappointment was supported by the 0.3% decline in skilled vacancies. Why? Well a high number for job vacancies usually add pressure employers to raise the wages.
There was also Melbourne Institute’s leading index which might have suggested that the economic growth in the country is slowing. June’s reading was at 0.0% following May’s 0.3% figure.
All in all, these three reports might have just given the RBA more reason to leave the country’s rates on hold.
But the Aussie’s bad luck didn’t end there. The Australian company BHP Billiton’s billion-dollar bid for Potash Corporation which is based in Canada put the currency under selling pressure. This meant that a huge amount of Aussies will be sold in exchange for ‘em Loonies. Uh oh.
And it looks like lady luck won’t be on its side today either. Sorry Aussie bulls, but with the average weekly wages for the second quarter printing at 0.8%, disappointing the 1.2% consensus, how can you hustle? However, it’s only the start of the day’s trading. A report may come up and flick the risk appetite switch back on.
We don’t have anything on tap for the Aussie tomorrow except for Deputy Governor Battelino’s speech. You may want to tune in to that as he could drop some hints on the central bank’s next interest rate decision. Also, keep tabs on the BHP-Potash takeover bid as this may continue to affect the Aussie’s fate on the charts. Be careful with your trades and please do take note that Australia’s general elections is coming up this Saturday. Good luck!
"The only cable I watch is the pound baby."