Daily Economic Commentary: Australia

[PipDiddy]

...And the losing streak continues! For the third day in a row, the Australian dollar struggled to find buyers and found itself depreciating in value. It lost 151 pips against the Greenback as AUD/USD closed at .9693, while AUD/JPY stepped down 80 pips to end at 74.97.

Although Australia published pretty upbeat construction data, it wasn't enough to overcome the bearish pull of risk aversion. According to the quarterly construction work done report, 12.5% more construction projects were completed in Q3 2011. Comparing this to the 2.1% increase that was forecasted and the 0.1% decrease that Q2 2011 saw, it's easy to see that this big jump in construction activity was a welcomed sight!

However, the celebrations were short-lived because after a couple of hours, China published weak manufacturing data, causing the Aussie to tank! Remember, China is one of Australia's biggest trading partners, so a contraction in the Chinese manufacturing industry can lead to a lower demand for Australia's imports.

The only thing we have to keep an eye on today is RBA Governor Glenn Stevens' speech at the Annual Forecasting Conference in Sydney. Will he give us an early Christmas present and tell the markets what the central bank is forecasting for the months to come? You'll have to tune in at 9:25 am GMT to find out, homie!

[PipDiddy]

Looks like the fourth time is the charm for the comdoll! AUD/USD broke its losing streak yesterday on a covering of short positions during the Thanksgiving holiday. The pair reached an intraday high of .9786 before it finished the day 37 pips higher than its open price. Boo yeah!

No economic reports were released from the Land Down Under yesterday, but many say that the currency bulls took advantage of the Thanksgiving holidays to take profits on their short positions on the high-yielding currencies. This is probably why the high-yielding Aussie still managed to bag some pips despite the onslaught of bearish reports in the euro zone.

The economic boards are once again empty in the Australia today, but make sure you keep close tabs on any economic reports in the other major economies that might affect risk sentiment!

[PipDiddy]

Down goes the Aussie! With risk aversion dealing heavy blows to high-yielding currencies, the Aussie had a difficult time finding buyers. When all was said and done, it finished 31 pips lower against the Greenback, with AUD/USD ending the week just a hair below the .9700 handle.

No surprises here! Once again, AUD/USD price action was heavily dictated by risk sentiment. Unfortunately for the Aussie, with risk aversion back in style, the odds were tilted heavily against it.

We don't have too many reports scheduled for release this week. The highlight of the week will probably be the retail sales report, which is due on Thursday. But to be honest, few are expecting fireworks from this report. Forecasts have it printing a 0.4% month-on-month increase, just as it did in September.

Until then, risk sentiment will probably continue directing AUD/USD, so be sure to keep tabs on developments in the euro zone!

[PipDiddy]

What a beautiful start to the week! After gapping up over the weekend, the Aussie tore up the charts, rising to as high as .9977 before settling for a 79-pip gain and finishing at .9901.

The reason for the Aussie’s total ownage? Risk sentiment!

With risk-taking picking up, comdolls like the Aussie were some of the biggest winners yesterday. With no data on tap for today, we can probably expect risk sentiment to continue to be the major driver of Aussie trading. Make sure you keep an eye out for any developments, especially in Europe, as you never know what might be the catalyst for a strong move in the markets.

[PipDiddy]

Just when debt rating downgrades are being doled out here and there, Australia enjoyed a nice UPGRADE from rating agency Fitch. This was enough reason for AUD/USD to rally by more than 120 pips up from its .9901 open price. AUD/JPY also ended the day in the green as it closed 6 pips above the 78.00 handle.

In stark contrast to the euro zone's downgrade-fest, Australia got a debt rating upgrade from AA+ to AAA from Fitch. The credit rating agency pointed out that Australia had a strong fundamental standing, as well as stable political and social institutions, which was why they deserved to hold a top rating. Aside from that, OECD also noted that the Australian economy is relatively safe from the current global economic threats, such as the euro zone debt crisis. In fact, they estimated that the Australian economy could grow by 4% in next year before slowing to 3.2% the following year.

Fresh off the press are stronger than expected economic data from Australia. The HIA new home sales figure showed a hefty 5.5% increase for October, making up for the 3.5% dip seen last September. Private capital expenditure also showed a strong improvement for the third quarter as it logged in a 12.3% increase, nearly twice as much as the second quarter's 6.2% rise.

There aren't any economic reports due from Australia for the rest of the day, which means that the bullish sentiment for the Aussie could carry on. Unless there's a significant shift in market sentiment, that is! Bear in mind that the U.S. is set to release a bunch of red flags today and these could be enough to trigger a midweek reversal. Be careful out there!

[PipDiddy]

Make that three for three! On the strength of overall risk appetite, the Aussie dominated the charts yesterday, marking its biggest rise in over a month. AUD/USD climbed a whopping 258 pips to close at 1.0284.

However, the Aussie has given back some of those gains this morning, as we just got some pretty disappointing building approvals and retail sales figures. Building approvals dropped by 10.7%, after it was expected that they would rise 3.6%. Meanwhile, retail sales came in worse-than-expected, printing a small 0.2% increase, as opposed to the expected 0.4% uptick.

Nothing on tap for the rest of the day, but make sure to keep an eye out on risk sentiment as this is clearly the major driver in the markets right now.

[PipDiddy]

Aha! It seems like Aussie bulls got tired after the sPIPtacular rally we saw from the currency on Wednesday. Yesterday, AUD/USD ended the day 63 pips below its opening price at 1.0221.

Aside from the lack of any developments from the euro zone, the Aussie also didn’t get any boost from the top-tier economic reports that were released from Australia yesterday. The building approvals report for October printed a 10.7% decline and disappointed expectations which was for a 3.6% uptick. On top of that, the retail sales report for the same month came in lower at 0.2% than the consensus. Consumer spending was predicted to match its previous level for September at 0.4%.

Our forex calendar is blank for reports from The Land Down Under today. But we do have the much-anticipated NFP report for November on tap today. Head on over to my USD commentary to know how to better anticipate the report. Just remember to gauge market sentiment and keep in mind that the Aussie usually rallies in times of risk aversion. Good luck!

[PipDiddy]

AUD/USD was still locked up like Lindsay Lohan in its range during yesterday's trading. After testing support around 1.0200, the pair traded higher to peak just around the top of its consolidation at 1.0305 before ending the day 13 pips above its opening price at 1.0268.

As I mentioned on my EUR and USD commentaries, risk appetite boosted higher-yielding currencies early on in the day. Consequently, the improvement in market sentiment must have allowed the Aussie to hustle some muscle despite the mixed reports we saw from Australia.

It was reported yesterday that the AIG services index for November was lower at 47.7 than the 48.8 reading we saw for October. On the other hand, we saw an improvement in ANZ job advertisements when the report for November came in flat after printing a 0.6% decline in October.

Hmmm, but perhaps the pair was unable to break away from the range because investors are waiting for the RBA interest rate decision which is due at 3:30 am GMT. Keep in mind that most market junkies are expecting the central bank to cut rates by 25 basis points to 4.25%. If we do hear a rate cut, AUD/USD could break below its range. However, if the RBA holds back, the Aussie may just rally back up to 1.0400 so be on your toes!

[PipDiddy]

AUD/USD's price action yesterday could be best represented by the letter "U" as it fell early during the Asian and European session but recovered sharply once the U.S. session rolled along. It ended the day at 1.0246, a small 35-pip loss from its opening price.

Like other major currency pairs, AUD/USD's crazy price action reflected the shifting market sentiment. At first, the market was pessimistic due to the news that the S&P warned the market of multiple downgrades in Europe.

The pair also received a hit when the Reserve Bank of Australia (RBA) fulfilled forecast and cut the country's cash rate by 25 basis points. Then, sentiment recovered when European leaders said that they're hoping to reach a long-term solutions for Europe's debt problems in the upcoming EU summit.

On the economic front, earlier today, the country's GDP report was published. It came just as expected and showed a 1.00% growth.

Later today, Australia's employment report will print. The market is expected the report to show 10,6000 net additional jobs were created and that the unemployment rate remained at 5.2%.

[PipDiddy]

It’s starting to look like 1.0300 is the line-in-the-sand for the Aussie this week! Once again, the pair failed to trade above the key psychological level and remained within range. What will it take for the Aussie to bust out of its recent consolidation?

The Aussie is already off to a bad start this morning, as Australian employment figures came in worse-than-expected. About 6,300 jobs were lost last month, while the unemployment rate rose slightly from 5.2% to 5.3%. Companies remain pessimistic about the state of the global economy and are responding by delaying any hiring or even reducing staff.

No other data on the docket today, but be careful trading during the London session as we have some red flags coming up from other countries during that time. Good luck trading today!