Daily Economic Commentary: Australia

Mid-week reversal for the win! Okay, maybe not exactly mid-week. Positive reports from Australia and a wave of risk appetite in markets propelled currency bulls to load up on the Aussie, which boosted AUD/USD by a whopping 84 pips to 1.0770. Boo yeah!

As I mentioned yesterday, Australia’s employment figures printed better than markets had expected, which gave the Aussie a lift early in the day. Factor in an interest rate hike from the ECB, rising commodity prices, and a surprisingly positive jobs report from the U.S. and you’ve got a recipe for a round of risk appetite. Too bad Happy Pip was on the other side of the trade!

No economic reports are on deck from the Land Down Under today, but make sure you keep close tabs on the big NFP report from the U.S. at 12:30 pm GMT. Market junkies are expecting a positive number after the uptick in the ADP report yesterday, so a surprisingly weak NFP figure might send the Aussie tumbling in the charts.

Good luck in your trades today, kiddos!

Despite the very disappointing NFP report, the Aussie remained on the back foot last Friday. The currency lost against most major currencies, with AUD/USD falling to to 1.0755 from 1.0769 and AUD/JPY dropping to 86.71 from 87.47. Will the Aussie be able to recover its losses?

Judging from the weaker-than-expected home loans report earlier today, it looks like it won’t be able to… at least, not today! The home loans report showed a 4.4%, which was slightly lower than the 4.6% increase initially expected. The previous month’s figure was also revised down to 4.6% from 4.8%.

while we do have some economic releases coming out from Australia in the next couple of days, none of them are particularly noteworthy. Focus instead on the U.S. economic reports, as they could indirectly have a strong impact on the Aussie. Check out my U.S. roundup for that!

Ooomph! The Aussie was hit with a one-two punch yesterday when a sharp selloff due to risk aversion was complemented by weak economic data from Australia. AUD/USD plunged by a whopping 94 pips to 1.0640 after hitting an intraday low of 1.0632.

As I mentioned yesterday, the Aussie started the day on the wrong side of the charts when Australia printed a weaker-than-expected home loans report. Things got shakier for the rest of the day when debt contagion fears in the euro zone inspired a selloff in high-yielding assets like the comdolls. Heck, almost all of the safe-haven currencies rocked the charts! But more on that on my USD, JPY, and CHF write-ups.

Let’s see if the Aussie bulls manage to stretch their muscles today. Australia will only be releasing the NAB business confidence report at 1:30 am GMT, but we all know that traders will be focusing on risk appetite and economic recovery in the U.S. and the euro zone.

With that in mind, keep close tabs on your trades, kids!

For a second day in a row, the Aussie headed “down under” the charts in yesterday’s trading. AUD/USD fell from its intraday high of 1.0665 all the way to its two-week low at 1.0525 before ending the day at 44 pips below its opening price at 1.0596.

Aside from risk aversion, it also didn’t help the Aussie that the NAB Business Confidence index came in lower in June than its reading in May. It was reported yesterday that business firms aren’t as optimistic during the month as they were before with the index down to 0 after coming in at 6 in May.

Westpac’s data on consumer sentiment didn’t boost the Aussie either. Its consumer sentiment index for July printed worse at -8.3% than its reading for June at -2.6%.

Our forex calendar is blank for reports coming from Australia today. However, be on your toes for the data that we have from China. Remember that China has been a big factor in the global recovery. Who knows, maybe positive growth figures would be enough to turn market sentiment around and boost higher-yielding currencies.

Thank you Mr. Bernanke! Due to Bernanke’s statement yesterday, the Aussie was able to steal some pips from the dollar. AUD/USD ended the U.S. trading session a 1.0741, a whopping 145 pips higher from its opening price during the Asian trading session.

Bernanke, in his statement in front of the U.S. congress, said that the central bank is still open to further easing if U.S. growth doesn’t meet their expectations. This made traders think about the possibility of additional quantitative easing, which led to a huge dollar sell-off.

No important economic data released yesterday and we won’t be seeing any again today from Australia. U.S. data will be the ones driving the Aussie today, so head on over to my U.S. roundup to see the things that you need to watch out for.

Just like yesterday, Bernanke’s statements ruled the price action of the dollar pairs. Too bad it’s the complete opposite of yesterday’s trading! Positive statements from Bernanke cooled down the dollar bears, pushing AUD/USD down 95 pips from its 1.0801 intraday high.

Only the MI inflation expectations report was released from the Land Down Under yesterday, and the data showed a 3.4% uptick in June from its 3.3% reading in May. It got little attention from the Aussie bulls and bears though, as they were too caught up in Bernanke’s statements suggesting that while the Fed is open to more stimulus, it doesn’t mean that they’re implementing another one as soon as the Fed members have finished watching the last Harry Potter movie.

No reports are scheduled for release today, so keep an eye out for more statements from policymakers, or the economic reports released from the U.S. and the euro region. You never know when risk sentiment fancies a reversal again!

Talk about going down under! The Aussie lost ground against most of its counterparts last Friday as traders grew concerned about the possible impact of the new carbon tax on the Australian economy. AUD/USD dropped from a high of 1.0656 to close at 1.0607 while AUD/JPY slid below the 85.00 handle and closed at 84.18.

Apparently, the new tax on carbon hurt business confidence in Australia, as many speculated that this could force the RBA to cut interest rates soon. This is why plenty of traders are waiting for the release of the RBA monetary policy meeting minutes on Tuesday 1:30 am GMT. Brace yourselves for a round of Aussie selling if the Governor Stevens and his men confirm that they’re considering slashing interest rates.

Other than that, no other top tier reports are due from Australia this week. Still, make sure you keep an eye out for the release of the MI leading index, the NAB business confidence figure, and the import prices report towards the middle of the week. Good luck and happy trading!

The Aussie started the week on a very weak note yesterday, no thanks to risk aversion. AUD/USD fell as low as 1.0560 before recuperating its losses slightly to end the U.S. trading session at 1.0597. All in all, pair was down a good 43 pips.

Earlier today, the Reserve Bank of Australia’s minutes of their most recent interest rate meeting was released. The minutes revealed that the central bank decided to take a wait-and-see stance with regards to monetary policy. The bank members said that there was no hurry to make changes now and they still had a lot of time to assess the impact of inflation on the economy.

No reports left on Australia’s economic calendar today so I don’t see the Aussie making any strong moves today. In any case, good luck trading today folks!

Not even dovish RBA remarks were enough to keep the Aussie from rallying yesterday, as AUD/USD jumped 123 pips up from its 1.0601 open price. AUD/JPY also had its share of gains as it came 3 pips close to the 85.00 handle. Let’s find out if the Aussie can hold on to its recent gains.

Upbeat reports from the U.S. and the developments in their deficit reduction plan brought risk-taking back in the markets yesterday, to the benefit of the Australian dollar and its fellow comdolls.

Because of that, the Aussie seemed to be unfazed by the downbeat comments issued by the RBA during their latest monetary policy meeting. The minutes of the meeting revealed that the central bank plans to sit on its hands and wait for a strong pickup in inflation before deciding to tighten monetary policy.

Today, the freshly released MI leading index printed a 0.1% decline for May, erasing part of the 0.2% uptick seen last April. This reflects weakening economic conditions in the Land Down Under mostly due to the downturn in consumer spending.

Australia won’t be releasing any other data for the rest of the day so I’d keep close tabs on risk sentiment if I decide to trade AUD pairs.

A decline in leading indicators? Ain’t no thang to the Aussie, baby! In spite of a soft MI leading index reading, the Aussie was able to stage a decent rally against the dollar as AUD/USD climbed to the top of the range on its 4-hour chart. Is it all downhill from here?

The MI leading index inched down from 0.2% to -0.1% in May as Australian consumers decided to keep their money in their pockets. This report tracks eight different aspect of the economy to predict how the economy will perform over the coming months. Some believe that this negative reading confirms the need for lower interest rates. What say you, RBA?

The bad vibes continued earlier today as the NAB business confidence index ticked down from 11 to 6. It seems Australian businesses lacked their usual luster after floods, fires, and storms battered business from April to June.

Since we don’t have any other reports coming out later, it’d be best to monitor risk sentiment and developments in the U.S. and euro zone if you plan on trading the Aussie. Bad news from either of these countries could trigger risk aversion and cause AUD/USD to fall from the top of its range. Good luck, kids!

And boom goes the dynamite! Just like that, AUD/USD broke through key resistance just below the 1.0800 handle. AUD/USD gained 90 pips on the day to close at 1.0833. Could the pair be headed for the 1.1000 mark?

The Aussie benefited from a nice run of risk appetite, as it appears that European leaders are coming up with solutions to the debt crisis. In addition, the U.S.’ own debt ceiling problems and rumors of a potential credit downgrade weighed down the USD, allowing AUD/USD to climb higher.

This highlights why it’s important to keep track of what’s going on in other major economies, as anything can play a major factor in shaping market sentiment. Make sure you bookmark my Pipnoculars blog so that you know what’s happening in the forex world!

Aussie chillin’ at a new two-month high! After finally breaking above resistance at 1.0800 last Thursday, AUD/USD took a well-deserved breather on Friday, rising just 17 pips for the day.

A strong quarter-on-quarter increase in import prices helped the Aussie maintain its gains against the Greenback. Import prices rose 0.8% last quarter to beat forecasts calling for a 1.0% decline. Obviously, the RBA will have to take into consideration the pressure of import prices when it makes its monetary policy decisions. Some say we may see a rate cut this year, but if inflation continues to crawl higher, the RBA may have no choice but to keep interest rates high.

Lucky for us, this week’s reports are all about inflation!

In just a few minutes (1:30 am GMT), we’ll take a look at Australian PPI, which is anticipated to show a 0.6% quarter-on-quarter increase in the price of goods and services sold by producers. Keep in mind that this figure is only half that of Q1 2011, so if the report prints even worse-than-expected, it could result in losses for the Aussie.

Then at 1:30 am GMT on Wednesday, Australia will roll out the big guns - its quarterly CPI report! Look for quarter-on-quarter inflation to soften from 1.6% to 0.7%. You know the drill! Be on the lookout for an Aussie rally (or selloff) if actual results come in above (or below) expectations!

Don’t you just love it when resistance becomes support? After breaking through the 1.0800 level last week, AUD/USD retraced a bit yesterday, only to find support at the psychological level. The pair eventually closed at 1.0847, gaining 8 pips on the day.

Yesterday, producer price input data was released and we saw that prices rose 0.8% last quarter. This was higher than the anticipated 0.6% uptick. As I mentioned yesterday, while the RBA may consider cutting rates later this year, they’ll have to think twice if inflation rises at a torrid pace.

No red flags coming up today, but watch out early tomorrow when quarterly CPI data is released at 1:30 am GMT. Word is that prices rose by 0.7% last quarter, but seeing as how PPI figures came in higher-than-expected, could we see the same in tomorrow’s report?

Up, up, here we go! The Aussie continued to take advantage of U.S. dollar weakness as AUD/USD reached a high of 1.0967 yesterday. AUD/JPY also strengthened as it closed 40 pips above the 85.00 handle.

Even though Australia’s CB leading index posted a 0.1% downtick for May, the Aussie was still able to rack up gains against the safe-havens. That was partly because RBA Governor Glenn Stevens expressed optimism about the Australian economy thanks to the mining boom. Although the central bank head said that he was concerned about the impact of the rising Aussie, he remained optimistic about consumption and business investment.

Today, Australia is set to release its CPI reading for the second quarter of 2011. After rising by 1.6% during the previous quarter, price levels are expected to post a weaker increase of 0.7% for Q2. A lower than expected figure could suggest that inflationary pressures are weakening in Australia, putting the RBA one step away from implementing another rate hike. Keep an eye out for that at 1:30 am GMT.

Also, stay tuned for any updates on the U.S. debt talks because this could have a huge impact on AUD/USD. Lack of progress for yet another day could put the U.S. at risk of a downgrade, or worse, default. Be careful out there!

King of the Hill baby! On the strength of strong CPI figures, the Australian dollar soared higher yesterday despite the run of risk aversion that weighed down other higher yielding currencies. The Aussie set a new all-time high at 1.1081 before settling at 1.1019, marking a 58 pip gain for the day.

The quarterly CPI report showed that consumer prices rose by 0.9% last quarter, which was higher than the anticipated 0.7% figure. In addition, the previous quarter’s release was revised up to 1.6%, indicating that consumer demand is strong in Australia. With year-on-year inflation now at 2.7%, above the RBA’s target 2.5%, it could give reason for the RBA to think twice before making any rate cuts later this year.

No news on the docket from the Land Down Under today, so expect Aussie trading to be market response to the U.S.’ debt ceiling problems.

You can’t win 'em all, can you? The Aussie was forced to end its 7-day winning streak against the Greenback yesterday as AUD/USD closed 35 pips below its 1.1018 open price. AUD/JPY also chalked up a loss as it closed 60 pips below the 85.00 handle. Let’s take a look at the upcoming data to see whether the Aussie can rebound today.

The lack of the usual upbeat data from Australia yesterday was probably the reason why the Aussie couldn’t go any higher against the U.S. dollar and the Japanese yen. It seemed that risk aversion was beginning to weigh on the Aussie as U.S. lawmakers still couldn’t get their act together when it comes to their debt plans. Make sure you also check out my U.S. economic commentary for the latest on the U.S. debt talks.

Today, Australia is set to release its private sector credit report, which could show a 0.4% increase in lending for July. A higher than expected figure would indicate that consumers and businesses are confident in their financial standing and are not hesitant to keep spending, which would be bullish for the Aussie. Don’t miss out on this report due 1:30 am GMT.

Chillin’ like a villain! The Aussie was practically unmoved against the Greenback last Friday amid weak private sector credit data. AUD/USD dipped to an intraday low of 1.0911 before it rallied to close the day near its opening price at 1.0986.

Private sector borrowing dropped 0.1% in June, making forecasts for a 0.4% increase look like mere wishful thoughts. All across the board, credit growth slowed down as households chose to save their dough and borrow less. Even business credit was in a slump in June as firms chose to raise funds through money markets rather than banks. Naturally, this begs the question, are interest rates too high for Australia?

Better yet… To cut, or not to cut? That is the question! At least that’s the question for this week! Tomorrow, the RBA will be looking to make its rate statement, and there are a small number that believe that we may see a rate cut tomorrow. To learn more about what to expect, I suggest you read Forex Gump’s take on the RBA interest rate decision.

While we don’t have any tier 1 reports on tap today, we do have a few coming out this week. Aside from the RBA rate decision, building approvals data will be due tomorrow. This will then be followed up by retail sales and trade balance reports on Wednesday. Last but not least, we’ll have the RBA monetary policy statement on Friday to cap off our action-packed week.

Good luck, kids! May the pips be with you all!

The Aussie headed down under in the charts yesterday thanks to the combination of risk aversion and bad data. AUD/USD ended the day 48 pips lower at 1.0968 while AUD/JPY closed at 84.60 after opening at 85.05.

It was reported that manufacturing activity contracted in July when the AIG manufacturing index fell below the 50.0 threshold. It printed at 43.4 after coming in at 52.9 in June. On top of that, home sales declined further following it’s -0.2% reading in May. June’s figure was at -8.7%.

On the brighter side of things though, inflation in Australia was higher in July. According to Melbourne Institute, consumer prices rose by 0.3% during the month after being flat in June.

I wonder if this would affect the RBA’s tone in its statement later at 4:30 am GMT. According to Forex Gump, no one is really expecting RBA Governor Glenn Stevens to announce a rate hike. However, recent reports about rising inflation may just be enough for him to take on a hawkish stance. So make sure you keep an ear out for that because that may just be all the Aussie needs to rally back to its highs!

Ouch! The Aussie took a very painful hit yesterday as the Reserve Bank of Australia (RBA) decided to leave rates unchanged and expressed its fear over the slowing global growth. AUD/USD, after it had climbed to an intraday high at 1.1000 prior the announcement, fell convincingly to end the U.S. trading session at 1.0800.

According to the RBA, while they were concerned about the inflation outlook over the medium term, they still chose to keep rates unchanged at 4.75%. Global growth wasn’t going as fast as they hoped and they should “exert a degree of restraint” when it comes to monetary policy. Needless to say, it was a crushing blow to interest rate hike expectations!

Earlier today, the Aussie took another hit as the country’s retail sales report and trade balance came out significantly worse than expected. Instead of showing a 0.4% gain, retail sales fell by 0.1%. The trade balance, on the other hand, only showed a 2.05 billion AUD surplus, lower than the 2.22 billion AUD surplus initially expected.

Australia’s forex calendar has nothing more in store for us today, so we better turn our attention to upcoming U.S. data. Pay close attention to the ADP non-farm employment change and ISM non-manufacturing PMI folks, as they will be the ones to determine the Aussie’s direction today!

Make that three for three! The Aussie closed 49 pips lower at 1.0759, marking the third time this week that the pair finished the day on a sour note. Do the Aussie bulls have what it takes to go for a midweek reversal?

After that massive run we saw last week, the Aussie has been one of the biggest losers so far in August. Okay fine, we’re just a few days in, but I do wonder if this will continue or if we’ll actually see the Aussie bulls see this as an opportunity to get in cheap.

No reports on deck today, but considering that the S&P500 finally ticked higher yesterday, we may see risk sentiment pick up, which in turn could give the Aussie a nice boost.