Daily Economic Commentary: Australia

[PipDiddy]

Make that five in a row! The Australian dollar added another day to its losing streak against the Greenback and the yen, with AUD/USD closing at 1.0269 and AUD/JPY landing at 78.71. How low can the Aussie go?

Even though Australia reported an improvement in consumer confidence, with the Westpac consumer sentiment figure printing an 8.1% increase, the Aussie was unable to fight risk aversion yesterday. The credit rating downgrade of two French banks and weak consumer spending data from the U.S. pushed traders to the safe-haven currencies, dumping the higher-yielding ones along the way. It didn't help that the Aussie was also weighed down by a surprise 4.7% dip in housing starts for the second quarter of the year.

Today, Australia is set to report the MI inflation expectations figure and new motor vehicle sales for August. Inflation expectations dipped from 3.4% to 2.7% in July, prompting many to doubt that the RBA would hike rates this year. However, if we see a rebound in inflation expectations for August, market participants could be less pessimistic about rate hikes. Meanwhile, an increase in new motor vehicle sales could reflect improving consumer confidence, which could provide support for the Aussie.

[PipDiddy]

Despite the release of poor economic data, the Aussie was able to surf higher on the charts and end its 5-day losing streak! After finding solid support at the 1.0200 handle, AUD/USD closed at 1.0320, marking a 53-pip gain for the day.

The Aussie had been one of the major losers over the past week or so, as the markets were beginning to fear that the RBA may have to cut rates later this year. Now, those fears aren’t gone just yet, but in the meantime, risk appetite seems to have picked up. If we see equity markets in the green today, it could be a good day to be an Aussie bull.

[PipDiddy]

Aussie bulls chugged pips during Friday’s trading like tequila shots on happy hour. After tapping an intraday low of 1.0295, AUD/USD traded higher and ended the day 49 pips above its opening price at 1.0369.

Aside from the market’s improved risk sentiment, traders must have also taken profits on their long dollar positions. So with our forex calendar still blank for reports from Australia today, you would do well to keep tabs on the market’s mood today. Keep in mind that the Aussie usually rallies when risk appetite is in play.

Tomorrow, the minutes of the most recent monetary policy meeting of the RBA will be released. If you’re still up at 1:30 am GMT, you may want to read up on what the central bankers from The Land Down Under had to say and you could just make a handful of pips! If they hint that the bank is open to cutting interest rates to spur Australia’s growth amid the slowing global economy, we may just see the Aussie pare its wins against the dollar.

[PipDiddy]

Down she gooooooooes! With risk appetite down in the dumps, the Aussie had difficulty finding buyers and found itself diving down the charts as well. AUD/USD was at 1.0223 at the end of the day, 146 pips below Friday's closing price.

No reports from Australia yesterday. Price action was purely dictated by risk sentiment! As commodities such as gold took a hit across the board, comdolls such as the Aussie followed suit and ended lower.

But so far, it seems as though the tides may be turning in favor of the Aussie. The most recent RBA monetary policy meeting minutes seem to be providing support for the currency. Nothing new was really presented as the RBA noted uncertainties in global growth and weaknesses domestically. However, in spite of all this, the RBA still maintained that conditions in the business sector as a whole have not drifted far from their long-run average.

More importantly, the minutes revealed that the members of the RBA agree that current monetary policy leaves the Board "well placed to respond to evolving global and domestic economic conditions." Hmm... Sounds a lot like the old wait-and-see approach to me! Perhaps the RBA wasn't as dovish as many had expected it to be.

That's all for today, folks! In the meantime, keep your eyes on risk sentiment as another wave of risk aversion could wipe out the Aussie.

[PipDiddy]

Cowabunga! The Aussie surfed up the charts after it dropped to its intraday low of 1.0148 against the dollar. It traded all the way up to its closing price of 1.0249 which was 16 pips above its opening price.

Aussie bulls should thank the have the RBA to thank for their pips yesterday. According to the minutes of the bank’s most recent meeting, policymakers remain very worried about inflation. They also remarked that economic growth in China, one of Australia’s major trading partners, remains to be very strong despite slowing growth elsewhere in the world.

The minutes might have come off as a pleasant surprise because from what I’ve heard, some market junkies had been bracing for talks of cutting interest rates.

Oh, and it looks like the Aussie's ride up the charts would continue today. The MI leading index for July came in higher at 0.5% than the 0.1% uptick we saw in June earlier. Don't get too excited buying the Aussie though. Keep in mind that the FOMC meeting is upon us and we could see a lot on volatility in today's trading. So be careful!

[PipDiddy]

Did I just watch Junior MasterChef Australia? Those kids may be young, but they do know how to chop things up… just like how the Aussie was diced into bits yesterday! Apparently, even though expected, the market took the Fed’s Operation Twist announcement extremely negative yesterday. This led to a wide-reaching case of risk aversion, with AUD/USD ending the U.S. trading session a whopping 194 pips lower from its opening price that day.

Just in case you have no idea what Operation Twist is, just head on over to Forex Gump’s article on it! He explains what exactly Operation Twist is and what the Fed’s intention is with the program!

Australia doesn’t have any tier 1 reports on the docket today so we could see the Aussie take a break from its wild, wild price action today. Keep an eye out on parity on AUD/USD though – it could serve as strong support for the pair!

[PipDiddy]

Thwack! Like most of the high-yielding currencies, the Aussie was put on the markets’ chopping block yesterday on a huge wave of risk aversion. AUD/USD broke down parity like it was tissue paper and dropped to an intraday low of .9692 before it leveled off to a 295-pip loss at .9762.

Though no major report was released from the Land Down Under, price action in markets reflected investors’ reaction to the disappointing FOMC meeting minutes. Market playas had been expecting more, you see, so the launch of the Fed’s “Operation Twist” suggested that major central bankers are running out of options to keep global economic growth from deteriorating further.

Today only Australia’s leading index is on the docket, and the data released a few minutes ago revealed a 0.1% slip in July, an improvement from June’s 0.8% decline. The day is just starting though. Make sure you keep in touch with risk appetite, aight? We never know when the high-yielding currencies could catch a break!

[PipDiddy]

While other major currencies managed to fight back and regain some of their losses, the Aussie remained in bear county as it marked a new 6-month low last Friday. AUD/USD had fallen as low as .9669 during the day before retracing its steps and closing week at .9768. t appears that concerns about global growth won't fade away any time soon.

With the exception of the HIA new home sales report, Australia's economic calendar this week presents nothing of interest. This means that the Aussie's direction will probably be determined by key data from other major economies, particularly those from the U.S.

Let's see whether the Aussie will be able to regain its footing and return above parity this week!

[PipDiddy]

Saved by risk appetite! After dropping to an intraday low of .9622 near the London session open, AUD/USD kicked back up and even finished the day with a 3-pip win at .9810. Boo yeah!

And to think that Australia didn’t even release any economic report! Yesterday central bankers and other market movers made reassuring speeches about the euro zone’s debt crisis, which turned out to be positive for risk appetite.

How long can the good vibes last? Australia’s economic list is empty again today, so make sure you stay in touch with any news that might affect risk appetite!

[PipDiddy]

After ranging like a range rover between .9800 and .9700 for a couple of days, AUD/USD finally broke out of its consolidation! It looks like Aussie bulls came out to reprezent yesterday, pushing the pair up the charts to end the day 102 pips above its opening price at .9912.

The Aussie didn’t have any economic report to fuel its rally but fortunately, risk appetite picked up yesterday. Whew!

As for today, we got a piece of positive news from the Land Down Under earlier. The HIA reported that the number of newly-built homes in Australia increased by 1.1% in August after contracting by 8.0% in July. However, this might not be enough to secure the Aussie a win in today’s trading. If you’re planning to buy the currency, you may want to keep your fingers crossed for more good news to come out of euro zone that would keep the positive vibes rolling in the market.