Daily Economic Commentary: Australia

[PipDiddy]

The Aussie was able to parry most of the Greenbacks attacks yesterday, but in the end it still tasted defeat. Ouch! Aussie sellers licked their chops as AUDUSD dropped 24 pips from its opening price to land at .8963.

The Aussie was handicapped early in the day when Australia’s employment data came out. Studies showed that there was an increase of 23,500 jobs in July, much better than the 20,000 uptick that was expected. But on the downside, June’s employment change data was revised down from an increase of 45,900 to just 37,400.

All in all, the results for July caused the unemployment rate to rise from 5.1% to 5.3%.Some say the increase in the unemployment rate could just be the result of more people jumping back into the workforce.

No reports from Australia today. In the meantime, make sure you have a good grasp of risk sentiment as it seems to be driving the markets lately.

[PipDiddy]

Without any economic report from Australia last Friday, the Aussie was left vulnerable to the market’s negative risk sentiment. The Aussie bulls hustled AUDUSD to an intraday high of .9036 only to get trampled by the bears during the London session. Tsk, tsk. The pair ended the week at .8931 giving the Aussie a 28 pip loss.

I don’t think today will be any different for the Aussie either. The only economic report we had for it is on motor vehicle sales which was announced earlier. According to the Australian Bureau of Statistics, purchases of new automobiles declined further in July to -2.6% from June’s -1.2% reading. Uh oh.. However, not all hope is lost. Who knows, risk appetite may kick in today!

Tomorrow is big day for the Aussie with the minutes of the latest RBA meeting on tap at 1:30 am GMT. So you may want to tune in to that if you’re planning to catch some pips with the Aussie!

[PipDiddy]

“I wanna be a pipllionaire so freakin’ bad,” sung the Aussie as it finally broke free of the bears’ attacks. But it wasn’t an easy win as AUDUSD dipped to an intraday low of 0.8859 after it opened the week at 0.8940. The pair then reached an intraday high of 0.8995 and closed the day at 0.8973, ending the Aussie’s losing streak.

It may have gotten lucky with the bulls yesterday as the economic reports from the US somehow tamed risk aversion and traders dumped the dollar because of its bad fundamentals. But that’s just me.

The only report we heard from Australia was on new motor vehicle sales. It showed that purchases of brand new cars declined by 2.6% in July, following the 1.4% drop in June. I don’t think traders thought much of it though. I have a feeling they’re looking forward to the minutes of the most recent RBA meeting which was released earlier today.

If you didn’t catch some pips from the release, don’t feel too bummed out about it. The general elections in Australia are scheduled this Saturday and we most probably see a lot of wild moves from the Aussie. I think the bears may have upperhand though as political uncertainty usually doesn’t sit well with the bulls.

Tomorrow we have the Westpac-MI leading index, DWER Skilled Vacancies and Wage Price Index to help us with our Aussie trades. Good luck and may the pips be with you.

[PipDiddy]

Score one for the Aussie! Thanks to a healthy risk appetite, it was one of the biggest winners against the Greenback yesterday. The risk rally sent the comdoll brothers up the charts, with AUDUSD rising 79 pips for the day.

According to the latest monetary policy meeting minutes, the RBA is maintaining its outlook for the Australian economy. They left their growth forecasts unchanged at a range of 3.75% to 4% for 2011 and 2012, while inflation is expected to stay within 2.75% and 3% for 2011.

When asked about the possibility of rate hikes, RBA Governor Glenn Stevens answered that the central bank would consider all economic factors and do its job. If you think this sounds vague, you’re not alone! But ultimately, most aren’t expecting to see another rate hike until next year.

Just minutes ago, the Westpac-MI leading index was issued. Although it was unchanged for the month of June, the report revised the previous month’s reading up from 0.2% to 0.3%. As a means of predicting future economic direction, it seems to be indicating stable growth. Let’s see if the bulls can feed off this and start a mini rally.

On the other hand, the quarterly wage price index printed 0.1% worse than expected by posting a 0.8% increase in the price the government and businesses pay for labor. This report is often used as an indicator of future inflation since the additional labor costs businesses incur are often passed on to consumers. Will traders take note of this and sell the Aussie? Stay tuned to find out!

[PipDiddy]

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!

[PipDiddy]

“That’s what you get when risk aversion kicks in! Whoo-ooh-oh,” sang the bears as they pounced on the Aussie in yesterday’s trading. AUDUSD fell like a rock after it reached its intraday high at 0.9018 and closed the day 64 pips lower at 0.8927.

Aside from risk aversion, sparked by disappointing US reports from the, there was also the disappointing report on Australia’s labor market. The Australian Bureau of Statistics reported that average weekly wages increased at a measly rate 0.8% during the second quarter, falling short of the 1.2% consensus. Boo!

We don’t have anything left for the Aussie until next week but note that elections will be conducted in Australia tomorrow. And remember, political uncertainty usually doesn’t sit well with investors so be very careful with your Aussie trades!

[PipDiddy]

V for the Aussie! Yes, yes, it’s a corny joke but that’s exactly how AUDUSD traded last Friday! While the pair did lose out early on during the Asian trading session, it managed to bounce back once the US trading session kicked in. AUDUSD eventually settled at .8923 by the end of the day, just 6 pips lower from its opening price.

According to the economic calendar, the only thing to worry about in terms of data this week is the release of Australia’s construction work done. Scheduled to come out on Wednesday at 1:30 am GMT, it is predicted to show a rise of 3% for second quarter from 1.9% during the first quarter of this year. If the actual results come in higher, we could see the Aussie find buying support.

[PipDiddy]

Even though AUDUSD gapped down over the weekend, the pair was quick to erase those losses and chalk up some gains as it rallied to a high of .8983. It looks like the Aussie is acting indifferent to all the political uncertainty going on in the Land Down Under!

My buddy Forex Gump pointed out that Australia is facing the possibility of a hung parliament since early exit polls revealed a tight race between the Liberal and Labor parties. That just means the fate of the proposed mining tax hangs in the balance! While the Liberals promised that they would eliminate the mining tax completely, a victory by the Labor party could seal in that 30% tax on the mining industry. But if the seats in Australia's House of Representatives end up getting split between the two parties, we might just be in for a longer round of squabbling over this mining tax issue. I don't think the Australian dollar would be too pleased with that.

Australia won't be releasing any economic reports today as investors are all eyes and ears on the updates regarding the recent elections. If you're trading Aussie pairs, I suggest you stay tuned too!

[PipDiddy]

“Aussie get low, low, low, low, low..” If the FX market had a resident RnB singer named Pip Rida, he’d probably sing that after the currency added 99 pips to its stack of losses against the dollar yesterday. AUDUSD tumbled to its 5-week low at 0.8798 before it closed the day at 0.8816. Tsk, tsk!

Other than the political uncertainty in Australia, the comeback of risk aversion in the markets might have kept the currency pinned down on the charts. But don’t fret! Reports suggest that the risk aversion may not be as nasty as it was before to the higher-yielding currencies.

Some analysts say that the Aussie bulls rallied when the disappointing figures from the US housing market were released. That could have been a go signal for the bears to take control of AUSUSD! This probably means that when Australia’s election results are out and risk appetite kicks in, the Aussie will finally be able to rally. Hah! Whenever that may be.

Earlier today, the Australian Bureau of Statistics reported that construction work done during the second quarter increased by 3.5%. Whooo-wait! Although the figure beat the 3.0% consensus, the good vibes brought about by this report could disappear faster than you can say “Shawty!” But that’s just me as I think risk aversion will still dominate the markets.

Good luck with your trades and be careful!

[PipDiddy]

Weeee! The Aussie rode the wild roller pip-coaster yesterday after risk appetite pushed the markets in several directions throughout the day. AUDUSD rose to an intraday high of .8895, and then dropped to an intraday low of .8771 before it closed at .8826.

The better-than-expected construction data yesterday might have helped boost the Aussie early in the day, when the data printed a better-than-expected 3.5% increase after rising by 4.2% last quarter.

Also comin’ in hot off the press is the CB leading index report that showed a 0.1% increase in June after rising by 0.3% in May. Will this be enough to attract the Aussie bulls?

Maybe traders are waiting for the quarterly private capital expenditure report out at 1:30 am GMT. The purchases of private businesses in the second quarter is expected to rise by 2.3% after dropping by 0.2% in the first quarter, but a higher number might signal that demand for Australia’s products remain healthy despite the threat of cooling demand from all over the world.