Daily Economic Commentary: Australia

[PipDiddy]

Just like its comdoll siblings, AUD/USD soared to new highs versus the dollar early in the trading day, only to give back most of the gains by the time the New York session rolled around. AUD/USD hit a high at 1.0689, but then settled at 1.0621, just 17 pips above its opening price.

News reports that the IMF downgraded Australia’s growth targets for 2012 may have helped the Aussie lose its luster. The IMF now expects Australia to grow by just 3.0% this year, down from the initial estimate of 3.3%. IMF officials cited weakness in the global economy as well as ongoing austerity measures as potential stumbling blocks for the Land Down Under.

No data lined up today, but that doesn’t mean you can take a chill pill and hit the waves early. We’ve got some potential market movers coming out from the U.S. and euro zone, so make sure you read up and do your homework! Good luck trading today mate!

[PipDiddy]

Just like Willow Smith’s hair, AUD/USD got whipped back and forth between the 1.0650 and 1.0600 handles in Friday’s trading. Luckily for the Aussie, negative data came out of the U.S. and helped it end the day with a 38-pip win.

As I mentioned in my USD commentary, the disappointing GDP data from the U.S. sparked a dollar sell-off. With that in mind and given that our economic calendar is still blank for reports from Australia, be sure you keep tabs on the data due to be released for the Aussie’s counterparts.

[PipDiddy]

Make no mistake about it, the Aussie didn't bring its A-game yesterday! Rather than extending its three-day winning streak by another day, it ended up weakening against the Greenback. This led AUD/USD to fall 50 pips and end the day at 1.0595. What a combo breaker!

The Aussie wasn't excluded from yesterday's sell-off as it was ditched along with its fellow comdolls. With the whole world worrying about Greek debt, the markets decided to flock back towards the arms of safe haven assets.

In other news, the Australian reports released just a couple of hours ago seem to be breathing life back into the Aussie.

For one, the NAB business confidence index rose from a reading of 2 to 3 in December. I know it doesn't really sound like much (Single digits, really??) but this is the index's highest level in 7 months! It seems business confidence hasn't been bogged down too much by the European debt crisis, eh? Of course, the RBA's recent rate-slashing spree might have also helped businesses keep their chins up!

On another note, the private sector credit report for January came in as expected and showed a repeat of last month's 0.3% increase.

That's about it for today! As always, keep yo' eyes on risk sentiment, homies!

[PipDiddy]

That's two for two! The Aussie scored another win against the dollar yesterday as AUD/USD ended the day 22 pips above its opening price at 1.0617. Can it extend its winning streak to three days?

Err, maybe, I'm not sure. For one, data that came out of Australia earlier weren't really impressive. The HIA new home sales report for December printed a 4.9% decline and erased the 4.4% growth we saw in November. Meanwhile, the house price index for the same month also dropped by 1.0%, more than the 0.7% decline that analysts had predicted.

There are also talks that the rally in higher yielding currencies might soon come to an end if we don't hear any positive developments from the euro zone regarding Greece's debt deal. Yikes!

With that said, be sure to keep tabs on market sentiment, ayt? Keep in mind that the currency usually rallies when risk appetite is up.

[PipDiddy]

Why hello there risk appetite! Fortunately for the Aussie, the market was in a good mood yesterday, helping it rally despite not-so-good economic data. AUD/USD ended the U.S. trading session at 1.0697, a very respectable 80 pips higher from its opening price.

As I mentioned in my other roundups, the bout of risk appetite was caused by positive news out of euro zone. Germany and Portugal was able to hit their targets in their respective bond auctions while rumors went around that a Greek swap deal could happen within the day.

In Australia, economic data was less than impressive. The HIA new home sales report showed a -4.9% figure, opposite the 4.4% growth seen the month before. Meanwhile, Australia’s house price index, which was slated to print only a 0.7% fall, reported a 1.0% decline instead. Then, earlier today, the building approvals showed a 1.0% drop, worse than the 2.1% gain consensus.

The only positive news from the country was its trade balance. It came in with a 1.71 billion AUD surplus, almost 50 billion AUD higher than forecast.

Whether the market’s attraction to risk will remain today or not will completely depend on events in the euro zone and the U.S. If we continue to hear good news, then the Aussie’s rally will probably persist.

[PipDiddy]

What bad economic data? Despite mixed economic reports from Australia, the Aussie bulls surfed the currency waves up and even pushed AUD/USD to the 1.0750 handle before pushing it to its 1.0706 closing price.

As I mentioned yesterday, the Aussie got off to a rocky start as Australia’s building approvals registered a 1.0% drop in December. Good thing the trade balance report surprised to the upside at 1.71 billion AUD!

Let’s see if the Aussie bulls keep up the optimism today. A few coffee cups ago we saw China’s services PMI clock in at 52.9 in January against December’s 56.0 reading. This is probably why AUD/USD dipped below 1.0700 for a while.

No other reports are scheduled today, so make sure you got your eyes peeled for the other reports scheduled for release in the other economies!

[PipDiddy]

Friday was definitely a good day for the Aussie as it managed to steal some pips from the safe haven Greenback. AUD/USD closed the day at 1.0706, 9 pips higher from its opening price. Then, earlier today, AUD/USD rallied again despite a weaker-than-expected retail sales report.

For the rest of the week, Australia's economic calendar this week presents some high profile events. Tomorrow, at 3:30 pm GMT, the Reserve Bank of Australia (RBA) will announce its decision on interest rates. The general consensus of the market is that the the central bank will cut rates to 4.00% from 4.25%. Rate cuts are normally considered bearish for the currency.

Then on Friday, at 1:30 am GMT, the RBA will release its monetary policy statement. It will provide us with some insight on the bank's view on the economy and inflation. It can also give us clues as to what the bank will do next with regard to interest rates.

[PipDiddy]

Hang in there, brothas! Despite a strong ANZ job ads report, the Aussie pared back some of its gains against the dollar yesterday. AUD/USD even reached an intraday low of 1.0684 before it capped the day 18 pips lower than its open price.

Don’t worry; Australia’s economic reports weren’t that bad anyway. You see, while the retail sales report surprisingly clocked in a 0.1% decrease in December and the AIG construction index only showed a 39.8 reading against its previous 41.0 figure, the ANZ job ads came in at a strong 6.0% growth in January against December’s 0.6% decline.

Today is a big day for the Aussie bulls and bears as the RBA is scheduled to release its interest rate statement at 3:30 am GMT. As Forex Gump pointed out, many are expecting the central bank to cut its rates by 25 basis points for the third month in a row tomorrow. No other report is scheduled for release today, so make sure you pay close attention to this one!

[PipDiddy]

Boy, do I feel bad for all those who shorted the Aussie in anticipation of a rate cut from the RBA! The central bank defied expectations yesterday and in turn made it possible for AUD/USD to rise to its 6-month high. AUD/USD ended the day's trading 71 pips above its opening price at 1.0800.

According the the RBA statement, it looks like Governor Glenn Stevens and his buds chose to look at the current economic conditions as a glass half full rather than half empty. Despite weaker demand conditions, central bankers focused on the improvements in the U.S. economy and the not-so-slow slowdown in China and their positive effects on the Australian economy. They then left interest rates unchanged at 4.25% when almost everyone was bracing for a 25-basis point rate cut.

Of course, it also helped the Aussie that risk appetite was up in yesterday's trading thanks to renewed optimism on a Greek debt deal.

Given that we don't have anything on tap from Australia today, I wonder if there are enough positive vibes left in the market today to fuel the Aussie's rally. Well, we may just have to keep tabs on market sentiment to find out. Be on your toes!

[PipDiddy]

Unlike its major comdoll buddies, the Aussie managed to contain its losses against the Greenback despite the risk aversion that settled in markets. AUD/USD reached an 11-month high at 1.0845 before settling 1.0792, 8 pips lower than its open price.

No economic report was released from Canada yesterday, but word on the hood is that investors are getting impatient that the European officials will be able to reach a deal in time for Greece to make its payments.

Don’t worry; the Land Down Under won’t be without its economic releases today. A couple of hours ago we saw the country’s NAB quarterly consumer confidence report print at an index reading of 1, which is a bit better than the -3 we saw in the previous quarter. China also contributed to the early morning craziness as its CPI reading showed a 4.5% acceleration in January.

How will these reports factor in the Aussie’s price action in the next couple of hours? Stick around and trade carefully, my friends!