Daily Economic Commentary: Australia

[PipDiddy]

The Aussie's makin' waves! It was one of the only two currencies among the majors to score a win against the dollar yesterday. AUD/USD ended the day 13 pips above its opening price at .9744.

For that, Aussie bulls have the RBA to thank for. The central bank cut the interest rate by 25 basis points to 3.5%. However, because the rate cut was still smaller than the market forecast (analysts predicted a 50 basis point cut), the Aussie was able to rally.

And it looks like today is gonna be a good day for the Aussie as well! Earlier, the Australian GDP report for the first quarter of the year came in at 1.3% and topped expectations for a modest growth rate of 0.5%. Sweet, eh??

But don't get too excited buying the comdoll just yet. Be sure you keep tabs on market sentiment. Who knows, risk aversion could kick in later in today's trading and get it sold off.

[PipDiddy]

Up, up, and awaaaay! The Aussie posted its biggest rally for 2012 as upbeat economic data lifted AUD/USD 184 pips to .9927. Next stop, parity?

Stronger-than-expected GDP growth kick-started the Aussie's big climb, and from then on, it never looked back. The Australian economy expanded by 1.3% in Q1 2012, more than double the 0.5% growth that many analysts had predicted. Meanwhile, Q4 2011's growth was revised upwards from 0.4% to 0.6%.

This huge upside surprise sent the Aussie and local stocks soaring, as expectations for further rate cuts from the RBA began to thin out. I did a little research, and apparently, Australia has got its booming mining industry to thank for the big surge in output.

And the good news continued earlier today, too! Just a few minutes ago, Australia followed up with some positive employment data, which showed that 38,900 jobs were added last month. Remember, many were expecting to see the job market shed 2,200 jobs, so you can imagine what a huge surprise this increase was! The unemployment rate, on the other hand, saw no major improvements as it fell in line with expectations at 5.1%.

That's all for today's reports, kiddos. Up next, tomorrow's trade balance data!

[PipDiddy]

Yikes! Despite a stellar jobs report from Australia, AUD/USD still ended the day lower. The pair was able to rally early on in the day and test parity, but come the New York session, it got sold off and closed 27 pips below its opening price at .9900.

As I said in my USD commentary, Ben Bernanake's surprisingly not-so-dovish remarks boosted the dollar during the latter part of yesterday's trading. But don't worry, Aussie bulls! We don't have any speech scheduled for the Fed's head honcho today.

We do, however, have a couple of reports from Australia (which were released earlier today) and the RBA head honcho's speech on tap.

The trade balance report was able to top expectations for the first time in four months. May's figure only printed a 20 billion AUD deficit when it was anticipated to show that imports outpaced exports by 92 billion AUD. Home loans for the same month also beat its forecast when it came in at 0.2% versus the 0.1% consensus.

Then later today, at 2:15 am GMT, RBA Governor Glenn Stevens will talk at the Chamber of Commerce. Keep an ear out for his speech as he could drop hints about the central bank's future monetary policy decisions!

[PipDiddy]

The Aussie, unlike other major currencies, was able to end up a winner last Friday. The Aussie’s stellar fundamentals allowed it just shrug off risk aversion and rally across the board. AUD/USD, closed Friday at .9921, 21 pips higher from its opening price that day.

In addition to the stellar jobs data and first quarter GDP, Australia’s trade balance beat market forecast last Friday. The trade balance showed only a 200 billion AUD deficit, which was extremely much better than the 920 million AUD initially expected. The Home Loans report also came in slightly higher than forecast as it rose 0.2%.

This week, Australia’s economic cupboard is pretty bare as no tier 1 reports are scheduled for release. However, this doesn’t mean that the Aussie won’t experience a lot of volatility! There are a number of market-moving events lined up for other major economies that could indirectly affect the Aussie’s price action.

[PipDiddy]

Looks like parity is just too tough for the Aussie bulls! For the second time in three days, the Aussie was rejected at the 1.0000 mark. Not only that, but AUD/USD dropped to new lows and finished at .9869, 117 pips lower on the day! What gives?

Just like its comdoll siblings, the Aussie fell victim to a strong wave of risk aversion yesterday. With no economic reports on tap from Australia today, Aussie trade will most likely be determined by risk sentiment flows.

Just watch out late tonight at 11:10 pm GMT, as RBA head honcho Glenn Stevens will be making an appearance at the Prime Minister’s Economic Forum at Brisbane. Chances are that Stevens will drop some comments about the RBA’s recent decision to cut interest rates, so make sure you tune in and listen to what he has to say!

[PipDiddy]

Despite the NAB Business Confidence survey turning negative and a drop in the Westpac consumer sentiment, the Aussie still managed to flex its muscles yesterday. AUD/USD closed the day at .9950, a solid 81 pips higher from its opening price that day.

The NAB Business Confidence survey fell to its weakest reading in three years. It stood at -2, 6 points lower from last month’s 4. According to the survey, business conditions took a huge blow by the resurgent concerns on the stability in the euro zone, lagging forward orders, and frail employment conditions.

Meanwhile, the Westpac consumer sentiment rose by only 0.3% compared to the previous month’s 0.8%. Apparently, the weak increase in sentiment was because consumers were worried about the condition of the domestic economy and economic instability offshore.

[PipDiddy]

Looks like parity is still boss for AUD/USD! After hitting an intraday high near the psychological level yesterday, the Aussie pared back some of its gains and ended the day with a 5-pip loss to .9945.

The weak Westpac consumer sentiment report didn’t help, of course. As I mentioned, concerns on the domestic economy as well as the economies of Australia’s largest trading partners kept a lid on the comdoll’s gains.

Let’s see if today’s reports will be of any help. A couple of hours ago we saw the MI inflation data come in at 0.3%, which is weaker than 0.8% gain we saw in May. If economic conditions deteriorate, there would be less obstacles for the RBA to cut its rates. But traders aren’t likely to worry about that anytime soon.

For now keep your eyes peeled for any news in the euro zone and the U.S. as they could set the tone for risk sentiment. It won’t be a bad idea to watch gold prices either, as it can also affect trading for the gold-related Aussie.

Good luck in your trades today, kids!

[PipDiddy]

Is that a breakout for real? After testing the resistance at parity thrice, AUD/USD seems to have made a convincing upside breakout as the U.S. dollar sold off heavily yesterday. Can the Aussie hold on to its gains and stay above parity today?

Happy Pip must be feeling extra giddy about her long Aussie trade right now as AUD/USD jumped above the 1.0000 major psychological mark yesterday. Weak CPI and jobless claims data from the U.S. forced traders to dump the Greenback as they weighed in the possibility of QE3 from the Fed next week.

As for Australia, the coast is clear in terms of economic releases for the next 24 hours. Keep in mind though that the U.S. is still set to release a few red flags, namely its Empire State index and University of Michigan consumer sentiment reading, which could still push AUD/USD around. Drop by my U.S. economic commentary to see how those reports could turn out!

[PipDiddy]

Mother of breakouts! No data was released from Australia last Friday, but positioning ahead of the “Greekend” and a breakout above parity pushed AUD/USD to close at 88 pips higher at 1.0087.

Of course, it also didn’t hurt the comdoll that the Greenback was the biggest loser in town. Heck, have you seen the latest U.S. data? You gotta read it on the USD part of my piece to believe it.

How long will the comdoll’s good luck run though? Only the new motor vehicle sales out at 1:30 am GMT is scheduled for release today, so you might have to look elsewhere for some Aussie action. How about the big G20 meeting coming up today?

If you really want to trade Australia’s reports though, then you might have to wait for the RBA’s meeting minutes tomorrow at 1:30 am GMT, and the CB and MI leading indices on Wednesday around 12:00 am to 12:30 am GMT.

Now go get some pips, son!

[PipDiddy]

Thanks to stronger than expected Australian economic data, the Aussie was able to outpace both the Greenback and the Japanese yen in yesterday's trading. AUD/USD closed a couple of pips up from its 1.0117 open price while AUD/JPY ended the day 2 pips above the 80.00 handle. Will it be able to hold on to its recent gains?

Australia reported a 2.4% jump in new motor vehicle sales for May, a huge improvement over the 1.0% decline seen during the previous month. This report reflects rising consumer confidence because demand for expensive goods such as cars and SUVs typically rises when consumers are feeling financially secure. Although this report doesn't usually move the Aussie that much, the lack of hard-hitting reports yesterday left the Australian dollar more sensitive to this medium-tier release.

The RBA is set to release the minutes of their most recent monetary policy meeting at 1:30 am GMT today. This could shed some light on the central bank's decision to keep rates on hold during their policy decision earlier this month and possibly provide some hints on when the RBA could implement their next rate cut. Now that's something I'm sure you don't want to miss out on!