The RBA’s 0.25% interest rate hike wasn’t enough to keep the Aussie afloat since it fell down under when a huge wave of risk aversion hit the markets. At the end of the day, the AUDUSD was seen gasping for air under the 0.9100 level.
Instead of rallying after the RBA’s sixth rate increase, the AUDUSD slid lower when accompanying comments from central bank officials confirmed that a seventh rate hike might not take place in the next couple of months. A week ago, RBA Governor Glenn Stevens already mentioned that rates are approaching average levels, hinting that they could pause with their aggressive monetary policy moves.
The Aussie was unable to get back on its feet when risk aversion, which resulted from heightened concerns of a global debt epidemic, crept back in the markets. Apparently, the EU-IMF bailout package and the ECB’s additional support for Greece weren’t enough to assure investors that the debt crisis would be contained. In fact, I’ve heard rumors that Spain might be the next euro zone nation to ask for aid…
Would the Aussie be able to shake off these negative vibes upon the release of Australia’s building approvals report today? After sliding down by 3.3% in February, building approvals are expected to bounce back by 0.9% in March. I have a nasty hunch that better than expected results could provide only a temporary relief for the Aussie, which could keep dropping if traders continue to steer clear from riskier assets. Stay tuned for the actual building approvals figure at 1:45 am GMT.
Although its losses were far less severe than the Western currencies, the Aussie fell down a couple of pips in yesterday’s trading session. The AUDUSD closed out the US trading session at 0.9050, down 41 pips from its open.
Earlier today, the Aussie found itself giving up more ground as its retail sales report failed to meet consensus. It revealed a measly 0.3% increase in sales for March, instead of the 0.7% increase initially expected. Meanwhile, Australia’s trade balance revealed that its trade deficit rose to 212 million AUD in the same month from 194 million AUD the month before.
No more data left on Australia’s economic cupboard for the rest of the day but tomorrow, at 1:30 am GMT, the Reserve Bank of Australia’s monetary policy report will be released. Keep a close eye on the report, as it could provide the clues we need to figure out whether we would see another rate hike next month. If it hints at another rate hike, we could see the Aussie find some buyer support.
Due to another run of risk aversion, the Aussie tumbled for the third day in a row, and this time, it was really bad. I mean really bad. I mean it was so bad that… okay you get the point. The AUDUSD dipped as much as 300 pips, before barely making an 8-count to stand up at 0.8859.
Early today, the RBA monetary policy statement was released, but it seems that traders haven’t paid much attention. As I’ve said in the past, I believe that traders have already priced in all the rate hikes, which is why the Aussie didn’t rally earlier this week despite the RBA hiking rates once again. Also, I think that everyone is just focusing in on what’s been happening in the euro zone and have pretty much ignored everything else. Ok fine, ignore might be too strong of a word. Let’s just say that other news have taken a back seat for now, and may continue to do so for the next few weeks.
With that said, make sure you tune in during the European and US sessions, and keep the tube and radio on. You never know when something new might develop in the Greek debt saga which might just spark another round of volatile moves in the currency markets.
After going deep-sea diving for a few days, the AUDUSD floated within a 135-pip range before heading off to enjoy the weekend. Did it get tired of too much diving or was it merely gearing up to explore new depths?
The RBA’s quarterly economic report revealed that central bank officials are now worried that the euro zone’s debt problems could spread and eventually harm the Land Down Under. If the strong Australian economy isn’t safe from debt contagion, then nobody is! Yikes!
According to their statement, fiscal problems in the euro zone could still intensify and force investors to retreat from risk-taking. This could then pave the way for another slowdown in the global economy and lead to period of declining commodity prices.
Being an export-dependent economy, Australia might have much to lose if this meltdown takes place. Recall that Reserve Bank of Australia Governor Glenn Stevens already hinted that the central bank would be less aggressive in the coming months and this recent statement reaffirms his cautious stance.
Based on the economic calendar, the main event for Australia this week is the release of its employment report on Thursday. The report could show a 22.6K increase in employment for April, which could keep the Australian unemployment rate steady at 5.3%. Better than expected results could allow the Aussie to stay afloat despite any possible incoming waves of risk aversion.
Also due this week are the ANZ job advertisements data, NAB business confidence index, and home loans report. After posting a 1.8% increase in March, job ads could post another uptick in April. Watch out for the actual results at 1:30 am GMT today since these could serve as a preview for the employment report due later on.
Yesterday turned out to be a wonderful day for the AUDUSD. After gapping up to open the week at 0.8970, the AUDUSD climbed to a high of 0.9079 before settling at 0.9023 by the end of the US trading session.
What else could’ve caused the mini-rally in the AUDUSD yesterday but risk appetite? Apparently, the EU/IMF one trillion dollar rescue package announcement caused a major global equity rally, with the Dow Jones Industrial Average climbing more than 3.5% while the Nasdaq advanced over 4.1%.
Hmmm, have debt contagion fears finally been contained? I think it’s too early to tell - we need to see more concrete evidence from both fundamentals and price action to confirm this potential shift in risk sentiment.
The important piece of data to keep an eye for today is the Australian government’s annual statement release at 10:30 am GMT. It statement will be delivered by Treasurer Wayne Swan and it will outline how the government plans to use their budget for the upcoming year. Since government spending accounts for a significant portion of a country’s gross domestic product, traders tend to watch the report to see where and how Australia’s economy will fare in the coming months.
With risk aversion on traders minds, the Aussie lost all its gains from the day before. After opening at 0.9026, the AUDUSD dropped just over 60 pips and closed at 0.8961.
Earlier today, home loans data was mailed in and came in worse than expected. Expectations were that home loans fell by 2.9% in March, but they actually dropped by 3.4%. This can probably be attributed to the recent series of interest rate hikes that the RBA has implemented the past couple of months. As interest rates rise, it makes taking out home loans more expensive. Could this be reason enough for the RBA to pause on further rate hikes in the coming months?
Nothing else coming out today, but look out for any major moves in dollar flows. Risk sentiment is driving the market right now, and if we see another run of risk aversion, we could see the AUDUSD take another dip in the deep end.
The Aussie was having a bad day since it kept getting wiped out by the greenback and the yen. It turns out the tiny wave of risk appetite, which pushed stocks and commodities slightly higher, couldn’t get the Aussie up on its surfboard yesterday.
Australian home loans for March took another unexpected dive, marking its sixth month in consecutive drops. The report posted a 3.9% decline for the month, worse than the estimated 2.0% slide seen in February. This suggests that the RBA’s aggressive rate hikes are starting to take their toll on the Australian housing market. With the higher borrowing costs, Australians now have to make larger interest payments on their loans, making them less willing to secure mortgages.
I’m sure you’ve already heard about how the RBA would probably pause from their rate hikes next month. After all, RBA Governor Stevens did mention that rates are moving closer to their normal levels. This freshly released home loans report just adds another reason for the central bank to keep interest rates on hold. Of course, the Aussie wasn’t too pleased with this news.
On a lighter note, Australia’s jobs report due today could post a 22.6K increase in hiring on top of the 19.6K employment change seen in March. This could keep their unemployment rate steady at 5.3% for April. If the actual figure meets or beats the consensus, the Aussie could recover some of yesterday’s losses.
Thanks to the better-than-expected results on Australia’s employment change report, the AUDUSD was able to enjoy a nice relief rally in yesterday’s trading session. It climbed strongly during the Asian trading session but eventually gave up some of its gains as the day went by and closed trading session with just a 30 pip gain.
The country’s employment change revealed that a net number of 33,700 jobs were created in April, higher than the initial forecast of 22,500. This also came on top of the previous month’s 27,700 addition. Despite this, Australia’s unemployment rate rose to 5.4%, as the number of people who entered the labor forced exceeded job creation.
No data coming out of Australia today so expect the Aussie’s direction would most likely be dictated by data coming out of other major economies, most especially the retail sales report and the consumer sentiment survey from the US.
Dollar strength across the board carried the AUDUSD lower, as risk appetite has been tempered as of late. The AUDUSD closed a terrible week with another loss, ending 100 pips lower at 0.8860.
The strong economic progress and recent rate hikes, the Aussie has been taking hits as of late, as risk aversion has weighed heavily on the markets. I think the strong down trend on the EURUSD has caused many traders to shift their positions in favor of the dollar, which is why the greenback is rising across the board. Take note that traders are focusing in on news regarding the euro zone’s debt issues, as it is sparking fears of debt contagion onto countries that are as far away as Australia. Make sure you’ve got your economic calendar and daily roundup on bookmark so that you can stay ahead of the game!
Speaking of keeping pace with the markets, there are no major economic reports coming out from Australia this week. Keep an eye out for the minutes of the latest monetary policy meeting due tomorrow at 1:30 am GMT. I suspect that we could see more hawkish comments from the RBA, but do watch out for any comments that the central bank may decide to pause interest rate hikes in coming months.
Australia doesn’t seem to be immune against the possibility of a debt contagion as Australian stocks logged in their largest drop in a year yesterday. As a result, the AUDJPY dipped to the 80.00 handle while the AUDUSD reached a low of 0.8686.
The RBA is set to release the minutes of their latest monetary policy meeting at 1:30 am GMT today. Recall that the central bank hiked rates for the sixth time in their latest rate statement but hinted that this could be the last of their aggressive monetary policy moves in the near term. The minutes of their meeting could shed more light on the RBA’s rhetoric behind the pause in rate hikes, possibly limiting the Aussie’s gains for today.
Just like other commodity-based currencies, the Aussie was sold-off in yesterday. The AUDUSD closed the US trading session at 0.8653, around 120 pips lower from its Asian session opening price that day.
Risk aversion stemming from euro zone and the speculation that the Reserve Bank of Australia could pause its rate-hiking ways were the primary causes of the Aussie’s decline. Also, earlier today, the Aussie found itself taking another hit when the Westpac consumer confidence index fell to 108 this month from 116.1 in April.
No data coming out of Australia today, but we will be seeing Melbourne Institute’s inflation expectations at 1:00 am GMT tomorrow. If the report comes in higher than March’s 4.1% figure, we could see the AUDUSD stage a minor relief rally.
Oy! What’s been happening with the Aussie?! This past week, the AUDUSD has dropped by 700 pips, closing at 0.8213 yesterday. With it being a Friday, could we see some profit taking take place?
The Aussie dollar, along with other commodities, has been selling off like rice bowls at an Asian hole-in-the-wall restaurant. The reason? Well, in my opinion, it certainly has nothing to do with the Australian economy! As I’ve pointed out time and again, the economy from the Land Down Under is actually one of the top performers in 2010, with the RBA leading the way in raising interest rates.
Seeing as how we’ve seen both USD and the JPY rise the past couple of days, this suggests to me that risk aversion is dominating market sentiment. The thing that confuses me is this - resilient currencies like the com-dolls all took a dip in the deep end this week, while the euro zone’s (where all this renewed risk aversion originated from!) currency, the euro, has just posted back to back gains versus the dollar! What the heck?!
With no major data coming out today, watch out for news coming out of the euro zone and the US. I wouldn’t be surprised if we see some profit taking to end the week. Besides, its not like the outlook on the Australian economy isn’t bright – its just being caught up in this recent wave of “get me the heck out of higher yielding assets” selling by traders. Traders may just readjust their positions as we enter the weekend.
After dropping five days in a row, the Australia rose back from the dead like Lord Blackwood! The AUDUSD closed 100 pips higher from its opening price to end at 0.8317. Hmmm, is this magic or merely a technical correction?
The Aussie benefited from a short return of risk appetite but I’m not quite so sure how long this will last. It seems that once the RBA became party poopers and said that they would most likely pause on any interest rate hikes in the coming months, traders are now looking to unwind their positions in the AUD, or to short it all the more. Risk aversion was the dominant theme last week, so traders may look to get into short Aussie traders if we see any retracements.
No red flags coming up until Thursday, when the private capital expenditure data will be released. Capital expenditure refers to investments in fixed assets – when companies invest in fixed assets, it normally means that they are expanding. Early estimates are calling for an increase in capital expenditure by private companies by 2.2% last quarter. Given all the good data that came out earlier in the year, could we be in for an upside surprise?
Ho hum… It was a relatively quiet day for the Aussie, which paced back and forth against the greenback and the yen. The AUDUSD closed above the 0.8300 handle while the AUDJPY was stuck between 75.50 and 74.25 during the London and US sessions.
Only the new motor vehicles sales figure was released from the Land Down Under yesterday. This report printed a whopping 8.4% increase in the number of new cars and trucks sold in April, which was a strong rebound over the 2.8% decline seen during the previous month. This upbeat report may have kept the Aussie afloat despite the lack of liquidity yesterday.
No economic reports are due from Australia today, leaving the Aussie sensitive to changes in risk sentiment and fluctuations in commodity prices. It seems that debt concerns in the euro zone continue to keep risk-taking at bay, which doesn’t look too good for the Aussie. Be careful out there!
Like other major currencies, the Aussie went on a wild roller-coaster ride yesterday. The AUDUSD found itself dropping early on during the Asian session but regaining most of its losses once the US trading session rolled along. At the end of the day, all in all, the AUDUSD only fell 44 pips.
Earlier today, worse-than-expected results on Australia’s construction work done pushed the Aussie down a couple of pips again. Instead of reporting a 5.5% gain for the first quarter of this year, it only revealed a 1.3% increase. Since construction activity contributes a large chunk of Australia’s overall production, this gave traders reason to believe Australia’s GDP report next week would come in below expectations.
No more data coming out of Australia for the rest of the day, so keep an eye out for news coming out of the US to determine where the AUDUSD is headed.
As Big Pippin pointed out in his chart art, the AUDUSD seems to be staying within its recent range. The pair failed to break past the neckline resistnace at 0.8350, and closed at 0.8231.
Earlier today, some mixed news was released from Australia. First, the CB leading index came in and printed a rise in the index by 0.3%. The index tries to measures the direction of the Australian economy in the coming six months, so an increase in the index indicates a more optimistic outlook. However, given the recent developments in Europe and the RBA’s recent comments hinting at a pause of interest rate hikes, we may see some pessimism kick in in coming months.
In other news, quarterly capital expenditure data failed to meet expectations, as capital investment fell by 0.2% in the past quarter. Early forecasts were for investments to rise by 2.1%. Keep in mind that the previous quarter, investments were up by a revised 6.1%. Hmmm, maybe all those interest rate hikes are making borrowing for companies a little more expensive. Maybe the RBA should pause on rate hikes eh?
Nothing coming out for the rest of the week, so we may see more range bound motion in Aussie pairs. Just be sure to watch out for any sudden dips in the EURUSD, as it could cause a flurry of strong dollar moves that would shake up therest of the market.
Surf’s up! The AUDUSD pair was feeling pretty stoked yesterday as it caught a huge wave of risk appetite and rode it all the way to the 0.8500 shoreline. The AUDJPY was also getting amped as it took a pipeline towards the 78.00 mark.
After getting wiped out in the past few days, wave conditions seemed much better for the Aussie yesterday. Risk sentiment improved after signs of hope emerged from the euro zone debt situation, with nations set on trimming their bulging deficits and China willing to hold on to its Eurobonds. On top of that, Australia saw a rise in its leading indicators for March. Recall that the Conference Board reported a 0.3% drop in its leading index a month ago but showed a 0.3% rebound this time.
Also, all the anxiety about Australia’s proposed mining tax seemed to die down yesterday when Prime Minister Kevin Rudd seemed to have second thoughts about raising taxes. For the past few days, many were worried about the potential negative impact of these mining taxes on profits, exports, and investments, causing the Aussie’s knees to wobble. However, Rudd seemed to back down on these plans yesterday, allowing the Aussie to recover.
These upbeat reports seemed to drown out the effect of the worse than expected business investment report. Private capital expenditures reported slid by 0.2% in the first quarter of the year instead of rising by 2.1% as estimated. It turns out the surge in mining investments was offset by a huge decline in manufacturing expenditures. If the proposed mining tax does get implemented, it might cause business investment to drop much more in the upcoming quarters, which could weigh on Australia’s economic growth.
Australia won’t be releasing any reports for today so we’ll just have to see whether the Aussie can keep up with its strong performance in the absence of any economic energy boosters. Stay tuned for other events that could impact risk sentiment, such as the ongoing strife in Korea and updates on the euro zone debt situation, since these could affect the Aussie’s mood.
A day after rising on a wave of renewed risk appetite, AUDUSD trading on Friday was much more subdued, as it traded within a range of just over 100 pips. Will the Aussie continue to regain some of its losses? Or will sellers be looking for more opportunities to short the Aussie?
The big event showing at the Sydney Opera House will be the Reserve Bank of Australia’s rendition of the play “Interest Rate Decision”. Just in case you skipped over the primer, lemme give you the gist of what’s been happening:
Over the past seven months, the RBA has rose interest rates 6 times, bringing the current cash rate up to 4.50%. However, recent comments made by Governor Glenn Stevens suggest that the RBA will hit the brakes and will hike interest rates this week. Now, given the recent slide in the AUDUSD, I think that traders have already priced this in, but if we do hear any dovish comments in the accompanying statement, we may see an encore of AUD selling.
As for other reports coming out this week, quarterly GDPdata will be available on Wednesday, 1:30 am GMT. Word on the reef is that the Australian economy posted growth of 0.6% last quarter, down from the 0.9% rise the previous quarter. Is the Australian economy showing some signs of weakness? I suspect that the RBA understands that the Australian economy is still heavily influenced by developments around the world. Given all the turmoil surrounding the euro zone, it’s not so shocking to see the RBA suddenly shift to a wait and see stance.
Surprisingly, despite the long holiday weekend, the Aussie was able to move quite a bit in yesterday’s trading session. It opened the week at 0.8474, rose to test the 0.8500 handle, failed, fell back to 0.8400, before rallying once again to end the day at 0.8447.
Earlier today, however, the Aussie found itself falling on mixed data. On the one hand, Australia’s report on building approvals fell more than forecast. According to the report, approvals in April declined 14.8% and not 5.2% like initially predicted. On the other hand, the report on retail sales covering the same period revealed that sales rose higher-than-expected by 0.6%.
For today, the spotlight will go to the Reserve Bank of Australia as the bank is scheduled to announce its decision on interest rates at 4:30 am GMT. Although it is widely predicted that the bank will hit the pause button this time around and keep rates at 4.50%, we can really never know for certain. If the RBA deems that another rate hike is necessary, expect to see the Aussie to soar across the board as traders adjust their positions.
The Aussie got wiped out by a huge wave of disappointing economic reports yesterday, causing the AUDUSD to fall to a low of 0.8283. The AUDJPY was also severely hit but it was able to bounce from the psychological 75.00 handle.
The Aussie was off to a rough start when it tumbled after China released a worse than expected manufacturing PMI reading for May. The report showed that the index fell from 55.7 to 53.9 during the month, reflecting a slower expansion in the manufacturing industry. Since a bulk of Australia’s exports go to China, weaknesses in the Chinese economy have a negative impact on Australia’s.
Later on, Australia’s unexpected downturn in building approvals for April pushed the Aussie even lower. This erased part of the 16.8% surge in building approvals seen last March, suggesting that the increase in borrowing costs is taking its toll on the housing market. That was probably one of the reasons why the RBA decided to sit on its hands and pause from its rate hikes this month.
In its latest rate statement, the RBA kept interest rates at 4.50%. Aside from the negative impact of higher borrowing costs, the central bank took a less aggressive stance also because of the ongoing debt crisis in the euro zone, which could result to another economic meltdown. Although this pause in rate hikes was probably priced in already, the AUDUSD still showed its disappointment by dropping to the 0.8300 handle a few hours after the statement.
The only good news from Australia yesterday was the better than expected uptick in retail sales. Consumer spending picked up by 0.6% in April, higher than the expected 0.4% increase. However, this report failed to give the Aussie a boost yesterday.
Brace yourselves for another major economic report from Australia today. The Land Down Under is set to release its GDP reading for the first quarter of the year and is expected to post 0.6% economic growth for the period. Although this is slightly lower than the 0.9% growth seen during the last quarter of 2009, a stronger than expected figure could provide the Aussie some support. Watch out for the actual results at 1:30 am GMT.