Daily Economic Commentary: Australia

With no major news that came out, AUD/USD traded within a tight range of less than 80 pips last Friday. With the greenback falling across the board, the Aussie managed to edged slightly higher, closing at .9899, good for a 22 pip gain.

Earlier today, producer price figures for 4th quarter of 2010 were released. The report revealed that producers charged just 0.1% more for their finished products. This was way off the expectd 0.5% mark. Remember, the PPI report is an indication of inflation because any prices increases are normally paid by consumers.

Will tomorrow’s CPI report show the same? Expectations are that the report will show an increase of 0.8%. Will a better than expected report give the slumping Aussie some support?

Thanks to a nice wave of risk appetite, the Aussie surfed up the charts all over the dollar! This led to a gain of more than 90 pips for the pair, allowing it to close at .9985. However, the CPI report was released earlier this morning. Could this set the tone for Aussie trading for the rest of the day?

Just like yesterday’s PPI report, this morning’s CPI report was disappointing, as it showed an increase in prices of just 0.4%, failing to hit forecasts of a 0.7% rise. This indicates that inflation isn’t rising as much as expected, which gives the RBA more reason to pause rates, which is bearish for the Aussie. Just take a look at the immediate price action following the release of the report – AUD/USD fell a good 50 pips!

I wonder though, will the markets simply ignore the data later on and let risk appetite take over? Stay on your toes fellas – you never know what may happen!

Not today, mate! Despite the bank holiday in Australia, the Aussie lost ground against the Greenback yesterday. Not-so-awesome Australian economic reports and risk aversion in markets plunged AUD/USD to an intraday low of .9890 before it capped the day 18 pips below its open price at .9967.

Australia’s CPI published at 0.4% in the fourth quarter of 2010, which is smaller than the third quarter’s 0.7% growth. The not-so-hot growth in consumer prices provides the Reserve Bank of Australia one more reason not to raise its interest rates, which attracted the currency bears. After all, the economy has enough trouble in its hands dealing with the effects of flooding.

Maybe the MI leading index report scheduled at 11:30 pm GMT today can give the Aussie reprieve. The index of nine economic indicators showed a 0.3% growth in October, so a higher number might be bullish for the Aussie. Still, you have to keep close tabs on risk appetite in markets, because the high-yielding comdolls are usually affected by risk sentiment.

Who says you need big waves to surf? Despite the lack of economic data, the Aussie was able to hang ten yesterday. It bested its major counterparts, forcing AUD/USD to finish 13 pips higher at .9979, and AUD/JPY 14 pips up to close at 82.12.

Earlier today, the MI leading index informed the public that all isn’t well. In November, it downgraded its reading from 0.3% to 0.0%, signaling dark clouds up ahead. The report said we should all expect slower growth in the months to come as consumer demand has been weak as of late.

The worst thing about this report is that it was based on information in November, which means it hasn’t even taken into account the floods in Australia. So the situation may actually be bleaker in reality!

The economic calendar will be empty for the rest of the day. But keep an eye out for the reports the U.S. is scheduled to publish. Those releases may just give Aussie bulls the waves they need to surf higher. Then again, it could just drowned them!

Risk aversion was up, so down went the Aussie! With no economic data to catch its fall, the Aussie was left at the mercy of risk aversion, which wasn’t very kind to the high-yielding currency. Although it closed practically unchanged against the USD at .9929, it fell against the yen as AUD/JPY posted a 67-pip fall to 81.55.

It seems like Aussie bears found even more reason to jump for joy earlier today. Private sector credit, which measures the amount of new credit issued to businesses and consumers, ticked down from 0.3% to 0.2% in January. Not the best way to start the week, given that forecasts were expecting another 0.3% rise.

Action should pick up even more starting tomorrow. At 3:30 pm GMT, the RBA will make its interest rate statement. In light of the floods in Australiaand the recent poor CPI showing, it’s widely expected that rates will remain unchanged at 4.75%.

On Wednesday, we’ll have building approvals and trade balance data on tap at 12:30 pm GMT. Building approvals are expected to rise 1.4% after falling 4.2% in November. As for Australia’s trade balance, its trade surplus is predicted to narrow from 1.93 billion AUD to 1.63 billion AUD.

Last but not least, we have the RBA monetary policy statement due at 12:30 pm GMT on Friday. It’s important to keep an eye on this announcement because it could dictate economic expectations over the coming months.

Score another one for the Aussie! The currency gained on the Greenbackfor the second day in a row when risk aversion eased a bit in markets. AUD/USD rose by 73 pips to .9965 after hitting an intraday low of .9867.

Australia’s private sector credit report failed to ward off the bulls even when it only grew by 0.2% in December, down from its 0.3% growth in November. Maybe it’s because the AIG manufacturing index for January is at 46.7, a bit higher than December’s 46.3 index figure.

Meanwhile, economic data released a few coffee cups ago revealed that the house price index rocketed by 0.7% in the fourth quarter last year after falling by 0.3% in the third quarter. This signals that Australia’s housing market might not be as affected by the high interest rates as some worrywarts think.

Too bad the NAB business confidence slipped to -3 in December! Since it showed a 6 in November, this could rain on the bulls’ parade.

Keep an eye out for more surprises today, will ya? The RBA is scheduled to release its interest rate decision anytime now, and while many expect the cash rate to remain at 4.75%, a dovish RBA statement could send the Aussie down the charts.

AUSSIE POWER! Although economic data was mixed and the RBA decided to hold rates steady yesterday, the Aussie was able to forge a new three-week high. AUD/USD blew right past parity, rising a total of 148 pips and ending at 1.0113.

Just as everyone had expected, the RBA kept rates at 4.75%. Inflation seems to be in check at the moment, so the boys of the central bank don’t see a need to rush with rate hikes. But what’s surprising is that the central bank didn’t seem to be too concerned about the floods in Australia. Governor Glenn Stevens even described its effects as “temporary.” Hmm… If the RBA isn’t too worried, then maybe we shouldn’t worry so much either.

As for yesterday’s releases, it was a mix of good and bad. On the positive end of the spectrum, the house price index posted a 0.7% quarter-on-quarter growth in Q4 2010, while forecasts were for a reading of 0.0% to follow up the previous quarter’s 0.3% increase. Home prices took a beating for most of 2010 because of the RBA’s rate hikes, so this surprising increase may just be temporary.

Business confidence is also down in Australia, and the floods may have something to do with that. According to the NAB business confidence report, confidence dropped 9 points to -3 in December, posting the first negative reading since early 2009.

Earlier today, the HIA new home sales report printed a 0.6% decline for December after November showed a 0.2% drop. So far, this hasn’t lessened Aussie bulls’ steam yet.

The final report of the day will come at 10:30 pm GMT. The AIG services index is due and could spark another round of Aussie buying if it prints a large improvement from December’s reading of 46.4.

Bummer, duuude! The Aussie wasn’t able to hang ten yesterday as bad economic data created waves too strong for the currency to surf. AUD/USD dropped 28 pips to 1.0085 while AUD/JPY was practically unchanged at 82.24.

Yesterday, the HIA new home sales report printed its second consecutive decline as we learned that new home sales dropped by 0.6% in December after November experienced a 0.2% decline. As I’ve said in the past, Australia’s housing market hasn’t been doing too well in light of the aggressive rate hikes the RBA implemented in 2010.

Earlier today, Australia came out with a few more releases. First, the AIG services index ticked lower from 46.4 to 45.5 in January. This drop marks the third straight month of contraction. Studies show that Australia’s high borrowing costs (again, the effect of aggressive rate hikes) are to blame for weaker household spending. The floods have also taken their toll on the services industry.

Fortunately, we got healthier readings from the building approvals and trade balance report.

Building approvals surpassed forecasts for a 1.6% growth as it recorded an 8.7% rise in December. Also upbeat, Australia’s trade surplus didn’t shrink as much as expected. In December, the 2.08 billion AUD balance only narrowed to 1.98 billion AUD and not 1.63 billion AUD as predicted. The floods have been hurting Australia’s exports, but perhaps the damage isn’t as bad as most had feared.

So far, we haven’t been seeing any big reactions to these releases. But stay sharp because the markets could just be gathering steam before making a big move. Keep your eyes on risk sentiment and commoditieswhile you’re at it!

The Aussie was rollin’ on a river of pips yesterday as it closed at its four-week high against the greenback. Thanks to positive reports from The Land Down Under, AUD/USD went on an uptrend all the way up to its closing price of 1.0160 after it opened at 1.0085.

Australia’s trade balance report for December showed that despite the Aussie’s recent strength on the charts, exports were still able to outpace imports more than what analysts had expected. It printed a 1.98 billion AUD trade surplus for the month and beat the 1.63 billion AUD consensus. To make it even better, November’s reading was revised up to 2.08 billion AUD from 1.93 billion AUD!

There was also the building approvals report for the same month which was more than five times the market consensus at 8.7%. And FYI, that’s the highest reading we’ve seen in nine months!

These reports show that the Australian economy was definitely on a roll before it got hit by a double whammy of natural disasters. However, according to the RBA monetary policy statement that was released earlier today, the RBA expects the economy to recover by the second half of the year. Whoohoo!

And get this! The report also revealed that the central bank sees inflation as a threat when reconstruction takes place. So does mean that another interest rate hike still on the horizon?

Surely, that would be good news for all you bulls out there. However, we may have to wait for more data before we can make that conclusion. As for today though, keep an ear out for the top-tier reports coming the U.S. as these may just rock the Aussie’s socks!

Despite some pretty hawkish comments from the RBA, the Aussie found itself on the losing end thanks to broadbased USD strength. After touching the 1.0200 handle, AUD/USD slid down the charts to close the week at 1.0141.

Unfortunately, today’s retail sales report came in worse than anticipated, as it revealed sales growth to for last month to be at 0.2%, failing to hit the 0.5% forecast. This wasn’t too surprising, given how last month’s floods wrecked havoc across the northern parts of the country.

So is the Australian economy improving or not? Today’s data suggests that while sales are growing, it is pretty anemic. Perhaps we’ll have a better idea later this week, when unemployment data becomes available on Friday. Word in the outback is that 20,300 jobs were added to the economy, while the unemployment rate remained steady at 5.0%.

It’ll be interesting to see whether last month’s floods had a similar effect on the labor market. If we see a much worse figure , we could see the Aussie dip back down below parity in the near future.

Trading the Aussie yesterday was about as chill as a day on the beach. MEGA CHILL! In spite of the heavy releases Australia rolled out early in the day, the Aussie hardly budged! AUD/USD finished the day at 1.0137, just 4 pips higher than its opening price.

The ANZ job advertisements report revealed that job ads have been picking up in the Land Down Under. After recording a 1.2% rise in December, the report posted a 2.4% rise. Australia has been lucky enough to have a healthy labor market despite the economic uncertainty surrounding the global recovery. As we can see, it’s just as solid as ever!

Unfortunately, retail sales haven’t been faring as well. According to the latest report, December only reported a 0.2% rise, less than half the forecasted 0.5% uptick. Analysts are attributing at least part of the disappointment to the floods that have been drowning consumer sentiment.

Just a few hours ago, the NAB business confidence printed a reading of 4 for the month of January, up from -3 the previous month. Hmm… Wait a second… Improving conditions in spite of the floods?? Maybe this is why the RBA didn’t seem so concerned at its last rate decision!

That’s all for today kiddos! Now let’s get back to making some pips!

I guess the Aussie wanted to be a pipllionaire so freakin’ bad that not even a rate hike from China could stop it from rallying! After tumbling from 1.0190 to a low of 1.0114, AUD/USD still ended the day 15 pips higher than its opening price at 1.0151.

Aside from risk appetite, I think that swag for the Australian economy also helped the Aussie on the charts.

Yesterday we saw that the NAB Business Confidence index came in a 4.0 for January after tapping its 19-month low at -3.0 in December. And you know what, it isn’t just banks and corporations feeling giddy about economic conditions in Australia!

The Westpac Consumer Sentiment report for February indicated that Australian consumers may just go back to their shopaholic habits and hike up spending when it printed a 1.9% uptick following its 5.7% decline in January. Boo yeah!

Let’s see if the employment report tomorrow will keep the good vibes rollin’ for the comdoll.

At 12:30 am GMT, the market is anticipating to see that the labor market added a net total of 20,000 people, while the unemployment rate is seen to have remained steady at 5.0%.

You may want to get a Trenta-sized caramel macchiato later because snoozin’ on this report may just cost you a handful of pips!

After falling 34 pips during yesterday’s trading to 1.0117 despite positive data, I’ve got a feeling (whoo-hoo!) that today’s gonna be a good day for the Aussie!

As I said in my previous entry, the Westpac consumer sentiment index showed that Australian consumers have become more optimistic on the economy in January. It came in at 1.9% after posting a whopping 5.7% decline in December when floods ravaged the country.

Now, in case you were still asleep when Australia’s employment figures were announced, the report showed that a net total of 24,000 people joined the labor market last month.

The figure didn’t only overshoot the market’s consensus an 18,400 increase in jobs. It also allowed the unemployment rate to remain at it lowest levels in two years at 5.0% and hit the forecast!

Don’t be too sure about rooting for the Aussie just yet though. If risk aversion rears its ugly head back into the markets again, we may just see AUD/USD tumble!

Awesome employment numbers but massive losses for the Aussie? What gives?! In spite of seemingly bullish employment data, AUD/USD slipped 72 pips down the charts and finished the day off at 1.0046.

On the surface, the results of the latest employment change report may seem upbeat, but a little probing reveals otherwise. Aussie bulls might have been grinning from ear to ear when they saw that last month saw an increase of 24,000 in employment, beating forecasts for 18,400, but the details of the report were actually supportive of bears.

As it turns out, the job growth in January can be attributed to a decrease of 8,000 in full-time jobs and an increase of 32,000 in part-time jobs. Ideally, you would like to see more of the former rather than the latter. It was also noted that Queensland accounted for a big chunk of job losses last month, which isn’t surprising considering it’s one of the areas hit hardest by the floods. But since the unemployment rate remained unchanged at 5.0%, the RBA will probably keep its hawkish stance.

In other news, RBA Governor Glenn Stevens took center stage a few hours ago saying the world economy is growing stronger. He sounded pretty upbeat and reiterated the central bank’s belief that the floods should only affect the economy in the short-term. I think it’s clear to see that the RBA hasn’t let yesterday’s employment data cast a shadow over its sunny outlook.

No more news from Australia today. For now, set your eyes to the west as the U.S. is scheduled to publish a couple of potential market-movers during the New York session. Good luck and may the pips be with you!

After opening at 1.0047, AUD/USD tumbled to a low of .9961 as we saw another case of loose lips sink pips. The comdoll tried to stage a comeback during the New York session. Too bad it was only able to hustle to 1.0021 when traders already called it a day.

RBA Governor Glenn Stevens surprisingly sounded dovish in his statement on Friday. Talking to the Parliamentary Economics Committee, the top dawg of the central bank said they could afford pull off a wait-and-see strategy because Australia’s economy is doing really well.

Most traders took this as a sign that the RBA may not hike interest rates anytime soon which is a total bummer since some already had their hopes up for a hike as early as May!

With that said you may want to be careful betting your pips on the Aussie because I think that Stevens’ hawkish words will weigh on the currency for some time. Then again, that’s just me.

If you really wanna root for the comdoll then you’re in for a treat because the home loans report for December showed a 2.1% for the month and topped the forecast which was only for a 1.8% uptick.

Tomorrow we’ll have the minutes of the most recent monetary policy meeting at 12:30 am GMT. Don’t snooze on that ayt??

Just when the Aussie thought it was in for another trip to the bear lair, tugsh! AUD/USD found support at its opening price of 1.0008. Wheew! It then traded higher all the way to its closing price of 1.0035. Now that was a close one!

Perhaps the better-than-expected home loans report was enough to keep the good vibes rollin’ for the comdoll. As I said yesterday, the home loans report for December showed a 2.1% for the month and topped the forecast which was only for a 1.8% uptick.

I’m not sure if the Aussie will be able to hang on to the bulls turf today though, given the not-so-hawkish minutes of the most recent RBA meeting that we saw earlier.

The report indicated that although the economy is doing really well, considering the natural disasters that hit Australia, members of the RBA seem to doubt if consumer spending is strong enough to sustain another hike.

Also, RBA Governor Glenn Stevens and his buds are thinking that maybe they should sit on the sidelines first. There’s no hurry anyway, seeing that inflation pressures have somehow eased. Yikes!

But then again, maybe risk appetite will make a comeback in today’s trading and fuel higher-yielding currencies.

If not, then maybe the MI leading index for December, on tap later at 11:30 pm GMT, will have the Aussie’s back. If the reading for January posts an uptick to follow its 0.0% reading in December, we’ll probably see the currency rally as this would indicate improving economic conditions in Australia.

A reading higher than the 0.8% uptick we saw in December for the new motor vehicle sales report for January may also help the Aussie when it is released tomorrow at 12:30 am GMT.

Boo hoo! That’s another day of losses for the Aussie. AUD/USD slid below parity as it fell from its 1.0035 open price to a low of .9944. What’s in store for the Land Down Under and its currency today?

The RBA monetary policy meeting minutes turned out to be a dud because it showed market participants that the central bank really wasn’t as optimistic as they sounded during the rate decision. It turned out that the policymakers believed that their current restrictive monetary policy stance was appropriate for the near term since there are still plenty of challenges facing the Australian economy. I guess that means we won’t be seeing an RBA rate hike soon, right?

Today, the freshly released new motor vehicle sales data showed a 1.9% drop for January, although the previous month’s figure was upwardly revised to show a 1.0% increase. No other economic reports are due from Australia for the rest of the week so make sure you keep tabs on market sentiment and commodity prices to see where the Aussie is headed!

With a wave of risk appetite hitting the markets, the Aussie once again found itself trading above parity. AUD/USD rose 87 pips to close at 1.0038. Can the bullish sentiment continue?

The Aussie bulls good fortune can be attributed to the positive reports released from the U.S. yesterday. Still, one day does not make a trend and recently, any bad news has weighed on the Aussie.

In fact, rumors are now circulating that some of Australia’s largest banks are under scrutiny by ratings agency Moody’s. If these banks are found to be in line for downgrades, it could pose a threat to the Aussie’s ability to stay afloat.

Looking ahead, no major data on deck, but do read up on my U.S. update, a we’ve got a tsunami full of economic reports coming our way during the N.Y. session. Surf’s up dude!

The Aussie was feelin’ so fly like Keri Hilson in yesterday’s trading as RBA official Phillip Lowe became its T.I., backing it up on the charts. AUD/USD chilled at its opening price of 1.0038 and started to trading higher during the New York session, ending the day at 1.0114.

Speaking at the Committee for Economic Development of Australia, RBA’s Assistant Governor showed his support for a tighter monetary policy to counter rising commodity prices.

We don’t have anything left on our economic calendar for the Aussie today. So make sure you gauge market sentiment in tracking the comdoll’s moves. Remember that it usually rallies when risk appetite is in vogue. Peace out y’all!

Just like Wiz Khalifa’s [I]Black and Yellow[/I] sneaking in the top 20 of [I]AT top 40[/I], the Aussie also sneaked a couple of pips against the Greenback. Risk appetite in markets boosted AUD/USD 30 pips above its open price at 1.0146 after slipping to an intraday low of 1.0089.

No reports are scheduled for a spotlight today, so the Aussie will probably dance to the risk appetite tune again today.

You won’t have to wait long for Australia’s reports though. Tomorrow at 10:00 pm GMT RBA Governor Glenn Stevens will give a speech about Australia and the Resources Boom in Melbourne. The RBA still hasn’t ruled out an interest rate hike this year, so stay glued to the tube for any hawkish comments!

Then on Wednesday at 12:30 am GMT we’ll get hold of the construction work done for the fourth quarter of 2010, as well as the CB leading index report at 11:00 pm GMT.

Last to hit the pip stages is the private capital expenditure report on Thursday at 12:30 am GMT. The data rocketed by 6.2% in the third quarter, so a dramatic dip might send the Aussie tumbling down the charts.

Good luck on your trades today!