Daily Economic Commentary: Australia

Trading Discussion News and Economy
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Happy Pip’s comdolls all took a hit against the low-yielding Greenback yesterday on the tails of the risk aversion theme that dominated markets. AUD/USD ended up testing its intrayear lows by closing at .9817. What the heck happened?

No economic report was released from the Land Down Under yesterday, but positioning ahead of a possibly disappointing meeting of the European leaders weighed on high-yielding currencies.

It doesn’t mean that you shouldn’t watch the comdolls though. Happy Pip just told me that commodities also took hits yesterday, which could signal potential downside for the comdolls. Meanwhile, the leading index reports from Australia should give you some challenge.

The CB leading index rose by 0.2% in March after stagnating in February, while the MI leading index clocked in a 04% in March after a downwardly revised 0.0% growth in February. Plenty of trade ideas right there, don’t you think?

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The Aussie sure knows a thing or two about going down under! AUD/USD slipped to its yearly low as risk aversion dominated yesterday’s trading. After opening at .9817, the pair dipped 10 pips below the .9700 major psychological level and closed at .9770. Will it continue to break lower today?

Australia reported improvements in a couple of its leading indices for March yet these figures were unable to keep the Australian dollar afloat yesterday. The MI leading index showed a 0.2% uptick while the Conference Board’s version of the report printed a 0.4% increase. Components of the reports revealed that the boom in the mining sector was the main driver for the improvements.

However, risk aversion spurred by the mess in the euro zone kept the Aussie’s gains in check and even pushed it to a new low yesterday. Make sure you drop by my euro zone economic commentary to find out what’s going on!

There are no economic reports due from Australia today, which means that the Aussie could be heavily influenced by risk flows again. On top of that, the Chinese HSBC manufacturing PMI release could also move Aussie pairs since China is Australia’s number one trading buddy. This report is due 2:30 am GMT and is expected to improve from April’s 49.3 reading.

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Just like Jessica Sanchez, the Aussie came so close to celebrating a win yesterday but failed. AUD/USD traded around .9800 and .9750 all throughout the day’s trading. However, the comdoll fell short by 7 pips of ending the day with a win at .9763. Boo!

It was the same sad story for the Aussie. Risk aversion stemming from concerns about Europe had investors seeking safe haven currencies and shrugging off higher-yielding ones.

If we see more bad news from the debt-ridden region, we’ll probably see the comdoll continue to trade lower especially since the lack of economic reports from the Land Down Under might leave it vulnerable to market sentiment.

So be on your toes, ayt?

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Now that’s how you put up a strong fight! Despite the strong wave of risk aversion, the Australian dollar managed to hold on tight and end the day unchanged against the U.S. dollar. Will the Aussie be able to keep itself from getting wiped out this week?

Australia didn’t release any economic figures last Friday, but the Aussie was able to draw strength from speculation that China was considering further easing. You see, recent reports revealed that lending in China was getting weaker and that banks are expected to fall short of their loan targets for the year. With that, Premier Wen Jiabao emphasized the need to shift policy in order to spur growth, prompting several market participants to anticipate a rate cut. If that happens, the additional boost to Chinese growth could carry over to commodity-dependent economies, which could be positive for the comdolls.

There aren’t any red flags on Australia’s schedule for the first couple of days of this week, as the first major report is due on Wednesday 1:30 am GMT. At that time, Australia will print its retail sales figure for April and probably show a 0.2% uptick.

Thursday has the Australian building approvals and private capital expenditure data on tap so make sure you watch out for those as well if you’re trading the Aussie. On Friday, China is set to release its manufacturing PMI for May, which could also be a big mover for Aussie pairs. Stay on your toes!

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Score another one for the Aussie! For the first time in a long time, it recorded its second straight win against the dollar as Aussie bears took a breather and allowed bulls to take control over AUD/USD. Will this pair continue to soar?

As it turns out, the Greek election polls gave the markets something to cheer about over the weekend as the conservative New Democracy party edged ahead of the radical leftist Syriza party. Also, a minor rally in commodities helped the Aussie and its fellow comdolls along in yesterday’s trading and allowed it to erase some of its previous losses. Who needs economic reports when you’ve got commodities backing your rally, right?

No tier 1 reports on tap for today, but early tomorrow morning, we’ve got retail sales data coming out! Look for April to print a 0.2% uptick following March’s solid 0.9% surge. In the meantime, risk sentiment and commodity prices will probably be key determinants in AUD/USD price action so stay flexible, homies!

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It stops at two! Just when we thought that the Aussie bulls are aiming for strike three, AUD/USD took a breather from its gains yesterday. The pair only reached an intraday high of .9899 before risk aversion eventually dragged it to its .9841 closing price.

Too bad Australia’s new home sales data didn’t help. The report showed a 6.9% bounce in April, which is a heck of a lot better than the surprising 9.4% decline in March.

Will traders focus on weak economic data instead? The retail sales data released a couple of minutes ago revealed a 0.2% slip in April. It’s not only weaker than the expected 0.2% gain, but is also lower than the 1.1% growth in March.

Oh well, at least construction work done in the country rose by 5.5% in the first quarter of 2012, better than the 3.4% weakness we saw in the last quarter of 2011.

Anyone plannin’ on trading the Aussie today? Good luck and good trading!

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And just like that, the Aussie erased all of its recent gains! AUD/USD ended the day at a new 1-week low as risk aversion took its toll on the high-yielding currency. When all was said and done, the pair finished at .9717, 124 pips lower on the day.

So far, the pair is finding support at the .9700 handle, as the recent release of mixed data seems to have stalled the sell-off. Building approvals fell 8.7% last month, far worse than the 0.3% uptick that analysts had forecasted. However, the negative vibes were sort of offset by a positive quarterly capital expenditures report, which revealed stronger-than-expected spending (6.1% vs. 4.1%) in Q1 2012.

Whether this will stop the Aussie’s dive is yet to be seen, but the Aussie will have to overcome falling gold prices if it wants to stage a comeback. Gold hit a new 2012 low yesterday, and it seems like sellers aren’t done selling!

In any case, I suggest y’all keep track of risk sentiment, as it seems to be driving the markets as of late. Good luck, kids!

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Ha! It seems that the Aussie bulls still have some muscles in them as they pushed AUD/USD higher despite weak economic data from Australia. Does this mean that the sellers are done selling after all?

Uh, not necessarily. Word from my forex peeps is that the Aussie remains vulnerable to developments (or the lack of it) in the euro zone and growth concerns in China, Australia’s largest trading partner. In fact, didn’t China just print a manufacturing PMI of 50.4 in May? That’s dangerously close to a contraction signal below the 50.0 mark!

No report is scheduled from the Land Down Under today, but do watch out for the HSBC manufacturing PMI coming out at 2:30 am GMT today, as well as the major NFP report from the U.S. at 8:30 am GMT.

Constant vigilance on your trades today, fellas!

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Weaker than expected Chinese data crippled the Aussie early on and prevented it from taking advantage of the U.S. dollar selloff that occurred later in the day. AUD/USD dipped to a low of .9582 before ending the day at .9686 while AUD/JPY closed at 75.69.

China reported that its manufacturing PMI fell from 53.3 to 50.4 in May, worse than the consensus at 52.1. This reveals that, although their manufacturing industry still expanded during the month, the growth was much weaker than before. Of course this doesn’t spell bright prospects for the Australian economy, which relies heavily on its exports of raw materials to China.

Australia also reported a 9.9% drop in commodity prices for May, following a 5.0% drop last April. Since commodities account for more than half of Australia’s exports, falling prices could hurt their export income, trade balance, and overall economic growth.

This week, Australia has a bunch of reports on schedule, starting with the ANZ job advertisements and company operating profits due today. Both reports posted declines, with job advertisements falling by 2.4% and quarterly company profits dropping by 4.0%.

Bear in mind that the RBA is set to make its rate decision tomorrow 4:30 am GMT and will probably highlight the recent weaknesses in the Australian economy. The question is, will these be enough to warrant another rate cut? We’ll just have to wait and see!

The excitement doesn’t end there as Australia is set to print its first quarter GDP report on Wednesday 1:30 am GMT. The report is expected to show a 0.5% reading, slightly higher than the 0.4% growth seen during the last quarter of 2011.

Then, on Thursday, Australia will release its jobs data and probably show a downturn in hiring. In fact, their jobless rate is projected to climb a couple of notches from 4.9% to 5.1% in May! Now that can’t be good for the Aussie.

Friday has the Australian trade balance on tap while Saturday has a bunch of Chinese reports due. It’s a pretty jampacked week for the Aussie, if I may say so myself!

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Surf’s up mate! Thanks to a wave of dollar selling in the markets, the Aussie climbed 55 pips higher to end the day at .9732. Can the Aussie continue its impressive run today or will it wipe out and lose all of yesterday’s gains?

The big news for today will be the RBA rate decision, which is headed our way at 4:30 am GMT. Expectations are that the central bank will be cutting rates by another 25 basis points, after it shocked the markets with a 50-point rate cut last month. I suggest keeping an ear out for accompanying statement, as it could signal whether the central bank is considering even more rate cuts for later this year.

Don’t forget to hit up my man Forexgump’s latest blog for his insight on all four interest rate decisions lined up this week!

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The Aussie’s makin’ waves! It was one of the only two currencies among the majors to score a win against the dollar yesterday. AUD/USD ended the day 13 pips above its opening price at .9744.

For that, Aussie bulls have the RBA to thank for. The central bank cut the interest rate by 25 basis points to 3.5%. However, because the rate cut was still smaller than the market forecast (analysts predicted a 50 basis point cut), the Aussie was able to rally.

And it looks like today is gonna be a good day for the Aussie as well! Earlier, the Australian GDP report for the first quarter of the year came in at 1.3% and topped expectations for a modest growth rate of 0.5%. Sweet, eh??

But don’t get too excited buying the comdoll just yet. Be sure you keep tabs on market sentiment. Who knows, risk aversion could kick in later in today’s trading and get it sold off.

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Up, up, and awaaaay! The Aussie posted its biggest rally for 2012 as upbeat economic data lifted AUD/USD 184 pips to .9927. Next stop, parity?

Stronger-than-expected GDP growth kick-started the Aussie’s big climb, and from then on, it never looked back. The Australian economy expanded by 1.3% in Q1 2012, more than double the 0.5% growth that many analysts had predicted. Meanwhile, Q4 2011’s growth was revised upwards from 0.4% to 0.6%.

This huge upside surprise sent the Aussie and local stocks soaring, as expectations for further rate cuts from the RBA began to thin out. I did a little research, and apparently, Australia has got its booming mining industry to thank for the big surge in output.

And the good news continued earlier today, too! Just a few minutes ago, Australia followed up with some positive employment data, which showed that 38,900 jobs were added last month. Remember, many were expecting to see the job market shed 2,200 jobs, so you can imagine what a huge surprise this increase was! The unemployment rate, on the other hand, saw no major improvements as it fell in line with expectations at 5.1%.

That’s all for today’s reports, kiddos. Up next, tomorrow’s trade balance data!

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Yikes! Despite a stellar jobs report from Australia, AUD/USD still ended the day lower. The pair was able to rally early on in the day and test parity, but come the New York session, it got sold off and closed 27 pips below its opening price at .9900.

As I said in my USD commentary, Ben Bernanake’s surprisingly not-so-dovish remarks boosted the dollar during the latter part of yesterday’s trading. But don’t worry, Aussie bulls! We don’t have any speech scheduled for the Fed’s head honcho today.

We do, however, have a couple of reports from Australia (which were released earlier today) and the RBA head honcho’s speech on tap.

The trade balance report was able to top expectations for the first time in four months. May’s figure only printed a 20 billion AUD deficit when it was anticipated to show that imports outpaced exports by 92 billion AUD. Home loans for the same month also beat its forecast when it came in at 0.2% versus the 0.1% consensus.

Then later today, at 2:15 am GMT, RBA Governor Glenn Stevens will talk at the Chamber of Commerce. Keep an ear out for his speech as he could drop hints about the central bank’s future monetary policy decisions!

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The Aussie, unlike other major currencies, was able to end up a winner last Friday. The Aussie’s stellar fundamentals allowed it just shrug off risk aversion and rally across the board. AUD/USD, closed Friday at .9921, 21 pips higher from its opening price that day.

In addition to the stellar jobs data and first quarter GDP, Australia’s trade balance beat market forecast last Friday. The trade balance showed only a 200 billion AUD deficit, which was extremely much better than the 920 million AUD initially expected. The Home Loans report also came in slightly higher than forecast as it rose 0.2%.

This week, Australia’s economic cupboard is pretty bare as no tier 1 reports are scheduled for release. However, this doesn’t mean that the Aussie won’t experience a lot of volatility! There are a number of market-moving events lined up for other major economies that could indirectly affect the Aussie’s price action.

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Looks like parity is just too tough for the Aussie bulls! For the second time in three days, the Aussie was rejected at the 1.0000 mark. Not only that, but AUD/USD dropped to new lows and finished at .9869, 117 pips lower on the day! What gives?

Just like its comdoll siblings, the Aussie fell victim to a strong wave of risk aversion yesterday. With no economic reports on tap from Australia today, Aussie trade will most likely be determined by risk sentiment flows.

Just watch out late tonight at 11:10 pm GMT, as RBA head honcho Glenn Stevens will be making an appearance at the Prime Minister’s Economic Forum at Brisbane. Chances are that Stevens will drop some comments about the RBA’s recent decision to cut interest rates, so make sure you tune in and listen to what he has to say!

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Despite the NAB Business Confidence survey turning negative and a drop in the Westpac consumer sentiment, the Aussie still managed to flex its muscles yesterday. AUD/USD closed the day at .9950, a solid 81 pips higher from its opening price that day.

The NAB Business Confidence survey fell to its weakest reading in three years. It stood at -2, 6 points lower from last month’s 4. According to the survey, business conditions took a huge blow by the resurgent concerns on the stability in the euro zone, lagging forward orders, and frail employment conditions.

Meanwhile, the Westpac consumer sentiment rose by only 0.3% compared to the previous month’s 0.8%. Apparently, the weak increase in sentiment was because consumers were worried about the condition of the domestic economy and economic instability offshore.

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Looks like parity is still boss for AUD/USD! After hitting an intraday high near the psychological level yesterday, the Aussie pared back some of its gains and ended the day with a 5-pip loss to .9945.

The weak Westpac consumer sentiment report didn’t help, of course. As I mentioned, concerns on the domestic economy as well as the economies of Australia’s largest trading partners kept a lid on the comdoll’s gains.

Let’s see if today’s reports will be of any help. A couple of hours ago we saw the MI inflation data come in at 0.3%, which is weaker than 0.8% gain we saw in May. If economic conditions deteriorate, there would be less obstacles for the RBA to cut its rates. But traders aren’t likely to worry about that anytime soon.

For now keep your eyes peeled for any news in the euro zone and the U.S. as they could set the tone for risk sentiment. It won’t be a bad idea to watch gold prices either, as it can also affect trading for the gold-related Aussie.

Good luck in your trades today, kids!

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Is that a breakout for real? After testing the resistance at parity thrice, AUD/USD seems to have made a convincing upside breakout as the U.S. dollar sold off heavily yesterday. Can the Aussie hold on to its gains and stay above parity today?

Happy Pip must be feeling extra giddy about her long Aussie trade right now as AUD/USD jumped above the 1.0000 major psychological mark yesterday. Weak CPI and jobless claims data from the U.S. forced traders to dump the Greenback as they weighed in the possibility of QE3 from the Fed next week.

As for Australia, the coast is clear in terms of economic releases for the next 24 hours. Keep in mind though that the U.S. is still set to release a few red flags, namely its Empire State index and University of Michigan consumer sentiment reading, which could still push AUD/USD around. Drop by my U.S. economic commentary to see how those reports could turn out!

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Mother of breakouts! No data was released from Australia last Friday, but positioning ahead of the “Greekend” and a breakout above parity pushed AUD/USD to close at 88 pips higher at 1.0087.

Of course, it also didn’t hurt the comdoll that the Greenback was the biggest loser in town. Heck, have you seen the latest U.S. data? You gotta read it on the USD part of my piece to believe it.

How long will the comdoll’s good luck run though? Only the new motor vehicle sales out at 1:30 am GMT is scheduled for release today, so you might have to look elsewhere for some Aussie action. How about the big G20 meeting coming up today?

If you really want to trade Australia’s reports though, then you might have to wait for the RBA’s meeting minutes tomorrow at 1:30 am GMT, and the CB and MI leading indices on Wednesday around 12:00 am to 12:30 am GMT.

Now go get some pips, son!

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Thanks to stronger than expected Australian economic data, the Aussie was able to outpace both the Greenback and the Japanese yen in yesterday’s trading. AUD/USD closed a couple of pips up from its 1.0117 open price while AUD/JPY ended the day 2 pips above the 80.00 handle. Will it be able to hold on to its recent gains?

Australia reported a 2.4% jump in new motor vehicle sales for May, a huge improvement over the 1.0% decline seen during the previous month. This report reflects rising consumer confidence because demand for expensive goods such as cars and SUVs typically rises when consumers are feeling financially secure. Although this report doesn’t usually move the Aussie that much, the lack of hard-hitting reports yesterday left the Australian dollar more sensitive to this medium-tier release.

The RBA is set to release the minutes of their most recent monetary policy meeting at 1:30 am GMT today. This could shed some light on the central bank’s decision to keep rates on hold during their policy decision earlier this month and possibly provide some hints on when the RBA could implement their next rate cut. Now that’s something I’m sure you don’t want to miss out on!