Daily Economic Commentary: Australia

Guess who put the “Aww” in the Aussie? That’s right, it’s risk aversion! I’m pretty sure that the Australian dollar wasn’t too happy about sinking back below parity against the U.S. dollar as AUD/USD dipped to a low of .9964 last week. Will the Aussie have a chance to recover or is it headed down under?

Australia didn’t release any economic data last Friday as the Australian dollar gave in to risk aversion and lost a lot of ground to its safe-haven counterparts. There aren’t any economic figures due from Australia for the first couple of days of this week so make sure you keep close tabs on market sentiment to figure out where the Aussie pairs could be headed.

On Wednesday, Australia will report its construction work done for the third quarter of the year. After printing a 0.7% increase for Q2 2011, the construction industry is expected to step up its game and triple those gains in Q3. However, if the actual figure falls short of the estimated 2.1% increase, Aussie pairs could be in for more losses. Yipes!

Also on Wednesday, China will release its manufacturing PMI for November. Bear in mind that their PMI just made it back above the 50.0 handle which indicates industry expansion, and it’d be a shame if the index falls below that level yet again. As we all know, China and Australia are trade BFFs, so a downturn in China’s economy could also be negative for Australia.

No other reports are due from the Land Down Under for the rest of the week as most traders will be off on their Thanksgiving holidays. Don’t forget though that less liquidity in the markets translates to more volatility. Be careful out there!

The Aussie experienced a case of “ouchies” yesterday as it gave up a lot of ground to the safe haven dollar. AUD/USD, for example, closed the U.S. trading session at .9664, more than 100 pips lower from its opening price that day.

It appears that risk aversion is here to stay. Global growth concerns are still present and the rising bond yields in some euro zone nations are worrying investors.

No important news release scheduled to come out from Australia today so don’t expect the Aussie to exhibit a lot of volatility. Still, be careful around 1:30 pm GMT, as the release of the U.S. preliminary GDP report could indirectly have an effect on the Aussie’s price action.

AUD/USD cruised across the charts as it moved sideways between support around .9825 and resistance below the .9900 mark yesterday. Will this consolidation continue for the rest of the week or is a breakout in the works?

Without any economic data from Australia yesterday, AUD/USD was forced to stay inside a range as it tried to hold on to the .9850 minor psychological level. Today, Australia just reported its construction work done for the third quarter of the year and boasted of 12.5% increase in construction activity. This was much better than the expected 2.1% rise and the previous quarter’s 0.7% uptick, suggesting that the industry is starting to rebound.

Later on, China is set to report its manufacturing PMI for the month. Recall that the index jumped back above the 50.0 mark and landed at 51.0 last month, signaling that the manufacturing industry is expanding again. If the November figure manages to stay above 50.0 or comes in higher than October’s 51.0 reading, we could see a rebound in risk appetite. Otherwise, if the index sinks back below 50.0 and indicates industry contraction once more, AUD/USD could break down from its current range.

No other reports are due from the Land Down Under or from its number one trade buddy China for the rest of the week. Stay on your toes for possible shifts in market sentiment though!

…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!

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!

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!

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.

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!

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.

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!

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!

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%.

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!

After a couple of days being confined in a 50-pip range, AUD/USD went wild yesterday! The pair broke out of consolidation and surged to a high of 1.0380 before sliding back down and closing at 1.0159. Meanwhile, AUD/JPY sank nearly a hundred pips from its 79.83 open price.

Australian employment data came in way weaker than expected as it printed a 6.3K decrease in jobs instead of the estimated 10.3K increase. This disappointing jobs figure was enough to bring their jobless rate up from 5.2% to 5.3% in November.

The poor jobs data wasn’t the main reason for the Aussie’s tumble though. In fact, the pair was able to keep its head above the 1.0250 minor psychological level until the middle of the London session. But when the ECB made its rate statement later on, volatility returned and pushed AUD/USD this way and that. To find out how the rate decision turned out and what ECB head Mario Draghi said, tune in to my euro zone economic commentary!

No other reports are due from Australia for the rest of the day, but bear in mind that data from China just came in weaker than expected. Their CPI landed at 4.2%, lower than the predicted 4.6% reading and the previous 5.5% figure. Their PPI also missed expectations as it printed a 2.7% increase, lower than the estimated 3.3% rise. With Australia’s #1 trading buddy undergoing a slowdown, the Land Down Under’s export industry could be in trouble as well.

Whew, that was a close one! Since no economic reports were released from the Land Down Under last Friday, the Aussie traded mainly on risk sentiment in the markets. After plunging to an intraday low of 1.0048, the Aussie bulls fired up and pushed AUD/USD to close 57 pips higher than its open price.

As I mentioned in my EUR writeup, optimism on the EU Summit agreements supported risk appetite near the end of the week. The question is, will the Aussie continue to trade on sentiments in the euro region, or will Australia’s less-than-spectacular economic reports finally weigh on the high-yielding comdoll?

Just when the Asian session traders are having their first coffee cups earlier today, we saw Australia’s home loans data clock in a 0.7% growth in October. It might be a bit lower than September’s 1.9% growth, but it’s still higher than the expected 0.1% increase. Meanwhile, the country’s trade surplus narrowed down to only 1.60 billion AUD in October after showing a 2.25 billion AUD surplus in September. Uh-oh.

Tomorrow at 12:30 am GMT we’ll see the NAB business confidence report together with the quarterly housing starts figures. Then, at 11:30 pm GMT we’ll get hold of the Westpac consumer sentiment readings for December. Around the middle of the week there aren’t any major reports scheduled for release, at least not until Thursday 12:00 am GMT when the MI inflation expectations and the new motor vehicle sales is due.

Make sure you watch your comdoll pairs closely, aight?

No thanks to the deadly combo of bad data and risk aversion, the Aussie plunged head first into the bear lair yesterday. AUD/USD opened at 1.0202 and tumbled down the charts to close the day at 1.0076.

As I discussed in my USD and EUR commentaries, Moody’s warning about possible downgrades for some EU countries sparked risk aversion and sent higher-yielding currencies lower. It also didn’t help the Aussie that Australia’s trade balance report showed that exports outpaced imports only by 1.60 billion AUD and came in lower than the 2.03 billion AUD surplus that the market was eyeing.

On the bright side of things, it wasn’t all bad news for the Aussie. Growth in home loans for October was actually seven times more than the forecast at 0.7%. Also, earlier we saw that the NAB business confidence index for November matched its previous reading of 2.0.

Now, if you’re planning to trade the Aussie today, keep tabs on the reports we have from the U.S. as they would probably dictate the currency’s fate on the charts. Good luck!

Risk aversion was the theme of the day yesterday, and the high-yielding comdolls aren’t exempted from the selloff. AUD/USD ended up falling for a second day in a row, sliding 71 pips to 1.0006 after dipping to an intraday low of .9980.

I detailed the possible reasons for yesterday’s risk aversion on my USD writeup, but we all know that it didn’t help the comdoll that Australia’s own economic reports disappointed expectations.

The NAB business confidence data printed a 2 reading in November, but the quarterly housing starts surprised to the downside with a 6.8% fall when market geeks were only expecting a 0.1% slip. Heck, even the Westpac consumer sentiment failed analysts’ expectations when it showed an 8.3% decline in December against the 6.3% rise in November. Yikes!

No major reports are scheduled for release in the Land Down Under today, but make sure you stay glued to the tube for any news that might affect sentiment for the high-yielding comdolls!

And the Aussie is back to the land down under! Down under parity, that is. AUD/USD sank below the 1.0000 mark and closed at .9908 as risk aversion trolled the markets yesterday. How low can the Aussie go?

Australia didn’t release any top-tier reports yesterday, leaving the Australian dollar at the mercy of risk sentiment. Without any hard-hitting data on schedule, traders decided to focus their attention on the ongoing euro zone debt crisis, causing higher-yielders to lose further ground.

There aren’t any major reports due from Australia today so y’all better keep close tabs on the release of Chinese manufacturing PMI. Recall that the index dipped back below the 50.0 mark in November and was revised down from 48.0 to 47.7. Another figure below 50.0, which would indicate that the Chinese manufacturing industry contracted again, could also be negative for the Aussie. Keep an eye out for that report due 2:30 am GMT today.

It appears that the the Aussie bears have finally run out of fuel as they were unable to take AUD/USD lower for another day yesterday. The daily chart shows a nice little doji, indicating that neither the bulls nor the bears were in control. With the Aussie below parity, will we see the bargain hunters start buying the pair again?

That’s a tough question to answer for now, so let’s wait and see how the Aussie reacts for the next day or two before coming to a conclusion. Moving on, it appears that Australia’s economic cupboard will be completely empty today since no data is scheduled for release. This means that Aussie will be primarily be driven by reports coming out of other major economies.

Despite the rebound in risk appetite last Friday, AUD/USD was unable to land back above parity as the 1.0000 held as strong resistance during the day. Still, the pair managed to close 58 pips above its .9914 open price.

Even though Australia didn’t release any economic reports last Friday, Aussie pairs managed to stay afloat as risk appetite improved then. Let’s find out whether this sentiment could carry on this week or not.

Today, Australia is set to release its CB leading index at 11:00 pm GMT. Recall that the index climbed by 0.1% in September after four consecutive monthly declines. Another uptick for October could give the Aussie a good boost.

On Tuesday, the RBA will release the minutes of their latest monetary policy meeting. Recall that the central bank slashed interest rates by 0.25% for the second time this year during their December rate statement. Although this move was widely expected, the minutes of their meeting could reveal a lot about their next monetary policy decisions and whether we’ll see more rate cuts next year or not. Make sure you keep an eye out for that!

No other reports are due from the Land Down Under for the rest of the week, which means that the release of the RBA meeting minutes could be the biggest mover for Aussie pairs. If you’re planning to trade the news, make sure you do your research and set those stops right!