Daily Economic Commentary: Australia

Little by little! The Aussie chipped away at its big loss on Wednesday and was the only comdoll that was able to make ground against the USD. In spite of lower inflation expectations, AUD/USD rose 33 pips to .9888.

Yesterday, we received news that inflation expectations softened from 3.1% to 2.8% last month. Now, on its own, this would have been terrible for the Aussie because it would give the RBA less reason to hike rates in the future.

But the RBA bulletin was able to counter this. According to the bulletin, the central bank believes utility prices may rise sharply in the coming years. Of course, higher utility prices may translate into stronger inflation, which would force the RBA to hike rates again.

Nothing more from Australia today. But keep an eye on the euro zone. The European Union economic summit is still ongoing, and Germany’s scheduled to publish its IFO business climate report. Those two have the potential to trigger a sudden change in risk sentiment, so stay on your toes!

The Aussie bounced within a tight 38-pip range against the Greenback last Friday on the lack of economic reports from the Land Down Under. AUD/USD finally ended its battle with a 6-pip loss at .9882.

This week promises to be more exciting for the Aussie as three economic reports will be released. First off is the CB leading indexreport today at 11:00 pm GMT. The data printed a 0.1% decline in September, so a figure higher could support the Aussie bulls.

Then on Tuesday we expect to see the Reserve Bank of Australia’s monetary policy meeting minutes. Recall that the RBA held back from raising its interest rates this month, so traders will be on the lookout for a more detailed explanation tomorrow at 12:30 am GMT.

The last report for the week is the MI leading index tomorrow at 11:30 pm GMT. It showed no growth for the month of September, so any sign of growth in October could help the Aussie gain ground against the Greenback.

Stay sharp in your trades this week, my young Padawans!

Let’s give it up for the Aussie! It was one of the best performers yesterday as investors bought it up in anticipation of the RBA monetary policy minutes released earlier today. By the end of the day, AUD/USD had risen 66 pips while AUD/JPY had climbed 22 pips.

Earlier, the CB leading index, which predicts the future direction of the economy, gave the Aussie a boost when it printed an increase of 0.6% after September had shown a disappointing 0.1% downtick. It seems economic conditions are improving in the Land Down Under, restoring confidence in the country.

After that, investors were finally able to get their hands on the latest RBA monetary policy minutes. So far, the release of the minutes have helped the Aussie climb higher. Maybe it’s because the RBA wasn’t as dovish as most had expected.

According to the minutes, MPC members deem current policies to be “appropriate.” They expressed concern over subdued spending and borrowing, but inflation is still expected to stay on course… which means it may not be too long before we see another rate hike.

Also noteworthy is how the minutes showed a lot of concern over Europe’s debt woes. Though it’s on the other side of the globe, the debt crisis in the euro zone has been taking its toll on the global economy and has affected Australia as well.

In other news, we have another leading index on tap today. At 11:30 pm GMT, the Melbourne Institute will publish its report. Let’s see if we’ll see an improvement from October’s 0.0% reading. A strong figure in this release may help the Aussie extend its gains.

Cowabunga, dudes! Like a true surfer, the Aussie was able to hold its head above water for the second straight day yesterday. With no big surprises from the RBA monetary policy meeting minutes, AUD/USD rose 27 pips while AUD/JPY climbed 23 pips.

As I mentioned yesterday, there was a tone of dovishness in the central bank’s last monetary policy meeting as its members expressed a lot of concern over the global recovery.

So then why did the Aussie gain??

Well, investors were prepared for it. They were expecting a dovish tone, and perhaps became hopeful when the RBA described the positive aspects of the economy.

If you think about it, Australia is doing much better than other developed economies. Its labor market is doing very well, and the outlook for business investment seems bright. These were highlighted in the minutes and probably helped boost the Aussie.

In other news, the MI leading index printed a 0.3% month-on-month increase in October after September failed to record a change. Since the index takes into consideration 9 economic indicators, it gives us a pretty well-rounded view of the economy.

Unfortunately, that was the last report from Australia for the week. But don’t fret because the U.S. is set to release potential market-movers today. For your daily economic data fix, check out the GDP and housing data they’re be rolling out later. Good luck out there!

While other major currencies scrambled to hold their ground against the dollar and the yen, the Aussie was well supported as it zoomed all the way to parity yesterday! AUD/USD closed the U.S. session at 1.0007, 44 pips higher than its opening price during the Asian trading session.

From the looks of it, the Aussie will remain strong going into the holidays, but don’t expect any major gains. Most traders seem to be on “standby” mode as they wait and see the market’s behavior come 2011.

Australia’s economic calendar also presents nothing of interest today, which means focus will turn to data coming out from other major economies, particularly the U.S. durable goods orders and the initial jobless claims report. If those reports disappoint, we could see another round of risk aversion, which could bring AUD/USD down from parity.

Enjoy the holidays, folks!

Despite the lack of economic data from Australia, Aussie bulls found a reason to be happy about, as AUD/USD managed to convincingly break through parity! The pair is currently trading above 1.0200, its highest level… ever!

The rally in AUD/USD was mostly due to the belief that 2011 will be the year that the economic global recovery will really get going. Apparently, China, one of Australia’s largest trading partners, will be upping its demand for commodities, which has helped the Aussie climb as well.

Australia will still be on holiday today, so no important data scheduled for release. On Thursday, however, expect to see the report on building approvals at 12:30 am GMT. If the actual figure manages to go beat December’s 9.3% figure, then we could see the Aussie post another round of gains!

After two straight weeks of pushing the Aussie up the charts, Aussie bulls finally showed signs of exhaustion yesterday. Has the rally come to an end? AUD/USD recorded its biggest slide in 13 days and posted its first loss of the year as it slipped 38 pips to 1.0168.

It seems the great flood that struck northeastern Australia has dampened spirits of investors. The catastrophe has not only displaced 200,000 people, but it’s also estimated to have caused over $6 billion AUD in damages! What a way to welcome 2011. Let’s hope Australia can pick up from this tragedy.

In other news, the AIG manufacturing index brought more sad news earlier today when it ticked down from 47.6 to 46.3. According to the index, the manufacturing sector has been in a state of contraction for four months in a row now, with the speed of contraction accelerating in the past two months. With the flood hampering transportation in Australia, maybe it’s time we show a bit of concern for the manufacturing sector.

We’ve got more data coming our way at 5:30 am GMT when the commodity prices report for December comes out. Will we see a higher figure than November’s 44.4% year-on-year rise? Remember, the Aussie received its comdoll status because of its strong correlation to commodities, so it’d be wise to keep tabs on this report.

After staying so fly like a G6 for a couple of weeks, the Aussie crash landed in the bear lair during yesterday’s trading. AUD/USD opened at 1.0168 and plunged all the way down to close at its 5-day low of 1.0053. Ouch!

The havoc caused by the massive floods in Queensland, Australia continued to worry investors. And making things even worse for the currency was the sharp decline in commodity prices. Remember that Australia is the world’s third largest producer of gold and yesterday, the yellow bling-bling fell from 1,414.70 USD to 1,380.72 USD.

On the contrary, the RBA’s commodity prices report for December showed that the price of exported commodities was higher by 47.7% compared to a year before and beat November’s 45.7% reading. But I guess the figure indicating stronger inflation wasn’t enough to counter all the negative vibes.

Today we don’t have any report on tap for the currency, so you may want to stay tuned to the commodity markets. Don’t worry because tomorrow we’ll get to sink our teeth into the AIG Performance of Services index for December.

A figure better than the 46.2 we saw for November will probably be bullish for the Aussie as this would indicate improving business conditions. But I think it will have to print a 50.0 reading or higher for the bulls to go on a pip-frenzy as this would indicate that the services industry is growing.

Without any economic report on tap, the Aussie suffered another wipeout on the charts yesterday. AUD/USD plunged from its intraday high of 1.0076 to .9960 before finally closing the day at .9997 with a 56-pip loss.

And it looks like the Aussie could be in for another dive! Earlier today, it was reported that the number of building approvals for November in Australia declined by 4.2%, more than the 3.6% fall that the market was bracing for. Uh oh…

But perhaps the improvement in the AIG Performance of Services index will be enough to let the Aussie hold on to parity. It came in higher at 46.4 in December than its 46.2 reading in November.

We don’t have any holler left for the currency for the rest of the week on our economic calendar, so you may want to keep an ear out on what’s happening to its counterparts. Happy trading y’all!

No shrimps on the barbie for the Aussie bulls last night… The Aussie posted its fourth straight drop yesterday! With no support from commodities and economic reports, AUD/USD continued its fall as it dropped 58 pips to end below parity.

With commodities still hanging low, the Aussie had a tough time holding its ground. It didn’t help that the latest building approvals data came in disappointingly. Analysts were already pessimistic with their forecasts of a 4.0% drop to follow the 8.3% rise seen in October. However, actual results for November came in even lower than this, posting a 4.2% decline in the number of new building approvals.

Nothing more coming out from Australia for this week. But just as Forex Gump said in his blog, keep an eye out for the U.S. NFP report. Things could get wild when it gets released at 1:30 pm GMT!

After inching down to its intraday low of .9907, the Aussie pulled off a rocketeer on the dollar and surged to its peak at .9993. Sha-bam! AUD/USD then ended the day at .9965 with a 26-pip win for the com-doll.

Aha! With the positive economic reports we had earlier today, it looks like the Aussie could be on its way to recover its losses against the scrilla!

The retail sales report for November came in as expected at 0.3%, while the AIG Construction Index printed higher at 43.8 in December than its previous reading of 42.2.

But don’t be too giddy for the Aussie just yet as the trade balance report and employment figures could make trading volatile.

Analysts are expecting to see that exports outpaced imports by 2.05 billion AUD in November tomorrow at 12:30 am GMT.

On the other hand, on Thursday at 12:30 am GMT, a net total of 25,300 jobs are anticipated to have been added to the Australian labor market December with the unemployment rate eyed at 5.1%.

Geronimooo! AUD/USD bungee-jumped 100 pips down from its intraday high to .9883 in yesterday’s trading. Good thing the bulls had enough adrenalin rush left to push the pair up to .9960, letting the Aussie score a 22-pip gain.

But wait! It looks like we might not see the comdoll stay so fly like a G6 in today’s trading.

It was reported earlier that Australia’s trade balance figures for November showed that exports outpaced imports only by 1.93 billion AUD. This might have disappointed a few bulls since the forecast was for a 2.03 billion AUD trade surplus.

There was also the ANZ Job Advertisements for December which clocked in lower at 2.0% than its 2.9% reading for November. Yikes!

Could this imply that the Australian labor market is already losing its steam? Hmmm, we may have to wait for Thursday when the employment change figures and the unemployment rate for December are released.

Until then, you may want to tune in to the housing finance report tomorrow at 12:30 am GMT. The number of loans issued is expected to have declined by 1.0% during the month, erasing part of the 1.9% growth that we saw in November.

The unending downpour that has caused flash floods in the north continues to weigh heavily on the Aussie. Once again, it lost out in yesterday’s trading, as AUD/USD tipped the scales 84 pips lower at .9876. Is there no end in sight?

Unfortunately, it seems like the rains may not recede any time soon, which is bad news for the Aussie. The catastrophe was projected to cause damages of over $5 billion, but that was last week. With the rains continuing, we may see higher figures in the coming days, which could further weigh on the Aussie.

The Aussie found some support early today though, when home loans data was released. A report revealed that home loans actually rose by 2.5% in November, a complete reversal of the projected -1.2% projection. Hmmm… perhaps the RBA is right in saying that raising rates won’t hurt the housing market too much.

Nothing else on deck for today, but watch out tomorrow as employment data will be available at 12:30 am GMT. The labor market is expected to have added 25,300 jobs last December. Take note though, that the labor market has shown some positive figures lately, with the employment change report beating expectations the past three months. Will it go for four tomorrow? Stay tuned!

The Aussie’s such a baller! After it experienced such a sharp fall against the dollar on Tuesday, it was able to fight back and regain all of its losses yesterday. AUD/USD ended the day at .9960, 100 pips higher from its opening price during the Asian trading session.

The Aussie’s rise came from two sources. The first one is internal, as a Australia’s home loans report came significantly better than expected. It showed a rise of 2.5%, opposite the 1.2% fall initially expected.

The second one came from Portugal’s successful bond auction. Portugal was reported to have sold 1.25 billion EUR in government bonds, which gave traders reason to believe that Portugal won’t need a bailout after all. Well, I don’t know about that… but hey, that’s how they reacted and that’s how it is!

Earlier today, however, mixed results from Australia’s employment report halted AUD/USD’s climb. The employment report showed that unemployment fell to 5.0% from 5.1%, but the number of net jobs created was only 2,300, much less than the 25,200 initially predicted.

No more data left on Australia’s economic cupboard today, so the Aussie’s direction will probably be mostly dictated by data coming from other major economies. Good luck!

The Aussie showed that it could take on the heat like LeBron by ending the day with an 8-pip win against the dollar at .9960 despite a disappointing employment report. Heck! AUD/USD even chilled at parity for a while!

Yesterday we saw that only a net total of 2,300 people were added into the Australian labor market in December which fell terribly short of the 25,200 forecast. On the bright side though, the unemployment rate tapped its two-year low at 5.0% and beat the 5.1% consensus.

Of course, it also helped that risk appetite was still kickin’ in the market and the floods in Queensland are slowly receding.

Since we don’t have anything on our economic calendar for the currency today, make sure you first get a feel of market sentiment before you bet your pips on it!

The Aussie got clobbered by the Greenback last Friday despite the lack of economic reports from the Land Down Under. Risk aversion in markets and continued effects of flooding in Australia weighed on AUD/USD, dragging the pair 64 pips down after peaking at an intraday high of .9994.

Aside from the flooding that has been taking its toll on Australia’s economy, China’s decision to increase itsreserve ratio requirement by 50 basis points also affected the demand for the high-yielding Aussie.

As I mentioned in my Japan report, the People’s Bank of China announced last Friday that it would raise its reserve ratio requirement (RRR) by 50 basis points starting January 20. This would mean that China’s banks would have to hold back 19% of their reserves at all times, which would lessen the money supply in China and could dampen economic growth. Since China is Australia’s largest trading partner, any move to curb its economic growth might lessen the demand for Australia’s exports. Uh-oh.

Maybe Australia can find support from its economic reports this week. The MI inflation gauge released over the weekend revealed a drop to 0.2%, but the new motor vehicle sales released a few coffee cups ago showed an increase from 0.5% to 0.8% in December. Not bad to start the week, eh?

No other economic report is scheduled for release today, but the Westpac consumer sentiment report will be printed tomorrow at 11:30 pm GMT. The MI inflation expectations will follow on Wednesday at 11:30 pm GMT, while Australia’s import prices for the fourth quarter is scheduled for a spotlight on Friday at 12:30 am GMT. Don’t even think of missing these big-hitters!

Score one for the Aussie! Like Anne Hathaway’s shimmering outfit in the Golden Globes Awards, the Aussie scored an A with the currency bears when a better-than-expected economic data clocked in from the Land Down Under. AUD/USD climbed by 25 pips after peaking at an intraday high of .9969.

Yesterday’s new motor vehicle sales report eased some of the market’s concerns when it printed a 0.8% growth in December, higher than November’s 0.5% rise. Will today’s Westpac consumer sentiment report keep the good vibes coming? The data is scheduled for release at 11:30 pm GMT, and a figure higher than December’s 0.2% growth could attract more bulls.

Good luck in your trades today, kiddos!

Just like Australian Open lone star Andy Murray, the Aussie was the only one among the comdolls to rally against the dollar in yesterday’s trading as AUD/USD ended the day 41 pips higher at .9977.

Good thing risk appetite was there to boost the currency up the charts when there wasn’t any economic data on tap early on the day. But I wonder if there will be enough left to keep the Aussie within reach of parity to counter a not-so-impressive consumer confidence figure.

Westpac’s consumer sentiment report came in at 104.6 for January following its 111.0 reading in December. According to the survey, the floods in Queensland weighed heavily on sentiment. Yikes! On a brighter note, Prime Minister Julia Gillard said yesterday that Australia can still print a budget surplus despite the staggering cost of recovery from the disaster.

For today, we only have the MI-Inflation expectations report on tap at 11:30 pm GMT. A figure higher than the 2.8% uptick we saw in November will probably be bullish for the Aussie as this may give the RBA a reason to think about another interest rate hike. So watch out!

The Aussie joined the anti-dollar party yesterday as it gained on the Greenback despite the lack of economic reports in the Land Down Under. AUD/USD reached as high as 1.0078 before settling down at 1.0001, 24 pips above its open price.

Will the Aussie stay above parity? The MI inflation expectations released a few School of Pipsology pageviews ago reflected that last December consumers expected the prices of goods to rise up to 4.6% in the next 12 months. This is bigger than November’s 2.8% expectation, and could be good for the Aussie since it could lead to another interest rate hike.

No other report is scheduled for release today, but watch your charts closely for any surprises!

Yeouch!!! The Greenback choke-slammed the Aussie yesterday when China and the U.S. released more awesome- than-expected economic reports. AUS/USD plunged by 126 pips to .9877 after hitting an intraday low of .9832.

Australia’s better-than-expected inflation report was pushed aside by China’s better-than-estimated economic report. Instead of pushing the comdoll higher though, strong growth in China also stoked fears that the PBoC will implement more tightening in the near future.

Of course, it also doesn’t help that the Greenback was the man’s man in the pip streets yesterday. The U.S. printed the highest monthly increase in home sales on record, which gained the attention of most pip-hungry bulls.

Looks like the Aussie isn’t going to get help from its economic reports today! The import prices report released a few coffee cups ago revealed that prices of goods purchased by importers dropped by 3.8% in the last quarter of 2010 after rising by 0.8% in the third quarter. Meanwhile, its export prices also fell by 8.1%. Uh-oh, does this mean that Australia’s goods are becoming less popular in world markets?

No other report is on the docket today, but keep your eyes glued to the tube for any event that might affect comdoll trading!