Daily Economic Commentary: Australia

Commodity-based currencies like the Aussie were broadly higher yesterday due to risk appetite. It was also supported by speculation that the Fed would implement some form of easing in its upcoming interest rate decision. AUD/USD rose to 1.0191 from 1.0118.

There were a couple of data reports yesterday but none of them were truly significant. The CB Leading Index fell 1.4% while the MI Leading Index showed a 0.5% climb. Both indices are designed to predict the direction of the economy.

No news reports are scheduled to be published today, so make sure to turn to other reports from other major economies to determine the Aussie’s direction today!

The waves were extra choppy on the Aussie front yesterday as AUD/USD bobbed up and down during the FOMC statement. At the end of the day, the Aussie got wiped out by the Greenback’s strength, pushing AUD/USD to close at 1.0175.

After days of anticipation, the much-awaited FOMC statement was unable to help the dollar pairs in finding a clearer direction as the policymakers simply decided to extend their current Operation Twist program. Prior to the event, AUD/USD was already consolidating below the 1.0200 mark, only to land back in that area when the Fed made the announcement.

There are no reports on Australia’s schedule today but China is set to release its HSBC flash manufacturing PMI, which could be a big mover for the Aussie. Recall that the index slipped from 49.3 to 48.4 in May, reflecting a contraction in China’s manufacturing industry. Another dip could spell worse prospects for the Australian economy, which relies heavily on its commodity exports to China, so make sure you keep close tabs on the report due 2:30 am GMT.

It that a bird? Is that a plane? No, it’s just the Aussie crashing and burning! Yesterday, the Aussie was sold-off heavily across the board as risk aversion hit the forex market. AUD/USD posted a 145-pip drop while AUD/JPY clocked in a 33-pip defeat.

Like the other comdolls, the Aussie took a hit because of the generally softer commodity prices. Oil fell below the $80 level for the first time in almost a year while gold tumbled to $1572. Weak data from one of its major trading partners, China, didn’t help either. The HSBC Chinese Flash Manufacturing PMI released yesterday decreased to 48.1 from 48.4 the previous month.

No major news release scheduled to be published today so the Aussie will probably be driven by risk sentiment today. If the economy continues to show sign of deteriorating, and commodities keep on sliding, expect to see the Aussie get sold-off again.

With no economic data on tap last Friday, the Aussie was able to pare its losses against the Greenback. AUD/USD rose by 40 pips after hitting an intraday high at 1.0078. What other factors spurred on the Aussie bulls?

As it turned out, markets were slightly optimistic over the European leaders’ meeting that took place late last week. Though it was a closed door meeting, market players bet that Angela Merkel, Mario Monti, Francois Hollande, and Mariano Rajoy will come up with something tangible after the meeting.

How long will the investors’ optimism last though? Australia’s economic board is almost empty this week as the HIA new home sales on Thursday and the private sector credit report on Friday are the only data scheduled for release. I guess we’ll have to pay closer attention to any news that might affect risk sentiment or gold prices then. Remember that the Aussie is highly correlated to gold!

Down she goes again! The Aussie might’ve taken a break from falling down the charts last Friday, but yesterday, she made up for lost time. AUD/USD began the week by gapping down from 1.0069 to 1.0043 and continued falling until it settled at 1.0007 at the end of the New York session.

Australian data wasn’t to blame for the Aussie’s weakness (Australia didn’t even publish any reports yesterday). Rather, risk aversion was responsible for its big losses! With the markets unconvinced that European leaders will reach a productive resolution in their meeting later in the week, the high-yielding Aussie had difficulty finding buyers.

Looking ahead, Australia still won’t be rolling out any new reports today, so risk sentiment will probably continue dictating AUD/USD price action. Also, since the Aussie is a comdoll, it would be wise to monitor commodity prices. Remember, gold and the Aussie tend to move hand in hand, homies!

Wham, bam, thank you China, you the man! Thanks to some good Chinese data, the Aussie sailed higher in yesterday’s trading rounds. AUD/USD rose 59 pips to finish the day at 1.0066.

A leading indicators report from China showed that the real estate market and banking loans bounced back last month. Remember, China is Australia’s largest trading partner, so if China’s on a roll, Australia should benefit!

Once again, nothing on the docket, so make sure you keep an eye out for any developments on risk sentiment, especially out of the euro zone. If it appears that European leaders are one step closer to fixing the crisis, it would most likely boost risk taking across the globe.

Despite the pre-EU summit jitters, the Aussie was able to sneak in some gains against the U.S. dollar and the Japanese yen with AUD/USD closing 11 pips up from its 1.0066 open price and AUD/JPY landing 34 pips above the 80.00 handle.

Australia didn’t release any economic reports yesterday but Aussie pairs were able draw support from a report showing that energy and mineral export earnings saw an 8% hike this year. This helped fuel the commodity price rally and boosted the commodity currencies as well.

Today, Australia just released its HIA new home sales report and printed a 0.7% uptick for May, roughly a tenth of the 6.9% jump seen during the previous month. Then again, an increase is still an increase, right? Components of the report revealed that the most recent RBA rate cut helped increase home sales for the month, and this effect could still keep supporting the Australian housing sector in the near term.

No other reports are due from the Land Down Under today, which means that you will have to keep close tabs on risk sentiment to figure out where Aussie pairs could be headed. Check out the rest of my roundup to see which reports and events you should watch out for!

The Aussie was given a big fat “F” in its performance report yesterday as it was sold heavily across the board. News reports suggest that traders continued to be risk averse due to speculation that Europe’s financial crisis will slow global growth. AUD/USD closed the day with a 32-pip loss while AUD/JPY ended 52 pips lower.

The only economic data released yesterday was the HIA New Home Sales report. It came in with a 0.7% gain after posting a 6.9% increase the previous month. Then, earlier today, the report on Private Sector Credit was released. It published a 0.5% jump, just as the market had initially expected.

No red flags on Australia’s forex calendar today, but don’t expect the Aussie to smoothly sail downwards! With the EU summit underway, a lot of surprises may be in store for us. Keep a close eye on price action folks!

The Aussie redeemed itself in Friday’s trading and earned an awesome “A” on its scorecard. AUD/USD traded higher after dipping to an intraday low of 1.0019. By the day’s close, the pair was up 189 pips from its opening price at 1.0235.

There wasn’t any market-moving data from Australia. However, the positive developments made in the EU Summit to address the debt crisis sparked enough good vibes in the markets to spur AUD/USD up to its 8-week high. (You can find out more about the EU Summit in my EUR and USD commentaries.)

For today, our forex calendar is still blank for top-tier reports for the Aussie. However, we did have a few low-impact data from The Land Down Under earlier.

The AIG manufacturing index came in higher at 47.2 for June from May’s 42.4 reading. On the other hand, the MI inflation gauge printed a 0.2% decline for the same month following the 0.0% figure we saw for May.

If you’re planning to trade the Aussie today, it might be a good idea to keep tabs on the reports we have from its counterparts as they could affect market sentiment and determine the comdoll’s fate on the charts as well. Be on your toes, ayt??

Despite the Greenback’s strong advances, the Aussie was able to hold its ground and limit its losses. AUD/USD traded sideways for the most part, ending the day just 8 pips below its weekly open at 1.0257.

The AIG manufacturing index rose from 42.4 to 47.2 and the MI inflation gauge printed a decline of 0.2%, but these were nothing but minor reports and they did little to move the Aussie.

However, the release of U.S. data got a bit of a reaction from the markets. For a while, it looked as though the Aussie would take a trip downtown as it fell sharply after the U.S. published worse-than-expected manufacturing data. But it recovered late in the New York session to erase some of its losses and salvage some pips.

Just a few minutes ago, Australia posted its building approvals report… and -surprise, surprise!- it was incredibly upbeat! Building approvals were up 27.3% in May, which is faaar better than anyone had imagined because forecasts only saw approvals growing by 5.1% after April’s 7.6% decline. Yowza!

It looks like this caught the attention of traders as it seems to be boosting the Aussie for now. But can we expect this to continue?

That depends on what will happen in the RBA rate decision, due at 4:30 am GMT! Most believe that the central bank will sit on its hands and keep rates steady, but if it dishes out dovish words and signals more rate cuts to come, it could seriously do some damage on the Aussie. Stay tuned, fellas!

The Aussie surfed up the charts yesterday as the RBA’s interest rate decision sparked a wave of bullishness in the market. AUD/USD rallied to an intraday high of 1.0298 after dipping to a low of 1.0229. It then ended the day at 1.0280, 23 pips above its opening price.

As expected, RBA Governor Glenn Stevens made no changes to the bank’s monetary policy and kept rates steady at 3.50%. He didn’t seem that optimistic in his outlook for the global economy, but sounded confident about the situation on the domestic front.

Of course, it also helped the Aussie that the building approvals report came in better than expected as it only affirmed the bank’s decision not to cut rates. The number of new building approvals issued in May grew more than five times the consensus at 27.3%.

And it looks like the good vibes for the Aussie didn’t end there!

Earlier, it was reported that retail sales grew by 0.5% in May after contracting by 0.2% in April. The figure also tops forecasts for a 0.3% uptick. Also, the AIG services index suggests that the country’s service sector could be on its way to expansion. The figure for June came in at 48.8 following May’s 43.5 reading.

Now the question is, will the positive vibes from these reports be enough to snag the Aussie another win today?

Steady as she goes! AUD/USD stayed mostly on course the entire day as it simply traded within a relatively tight 60-pip range. By the end of the U.S. trading session, the pair was sitting at 1.0278, just 3 pips lower than its opening price that day.

Earlier today, however, Australia’s trade balance was released. It came in much better than expected as it only showed a 290 million AUD deficit. The forecast was for a 510 billion AUD deficit.

No red flags on Australia’s forex calendar left for today, so don’t expect the Aussie to exhibit a lot of movement. Watch the previous day highs and lows folks, as they could serve as important inflection points!

Thanks to a rate cut by the PBoC, the Aussie held its own in yesterday’s wild action in the forex markets. AUD/USD stayed afloat and managed to edge 12 pips higher to finish at 1.0289. After four straight days of consolidation, is AUD/USD prime for a breakout?

For the second time in less than a month, the People’s Bank of China cut base line rates, which is both a good and a bad sign for commodity-based economies like that of Australia.

On one hand, it means that the PBoC recognizes that the Chinese economy is starting to slump. On the other hand, it also indicates that the central bank is gonna do whatever it can to prop up the Chinese economy, which should bode well for Australia. Remember, China is one of Australia’s largest trading partners, so whatever direction the Chinese economy is headed, the Australian economy normally follows suit.

Nothing lined up today, but seeing as how we’ve seen some tight consolidation the past four days, I can’t help but feel we’re headed for a break out today. Keep in mind that the U.S. non-farm payrolls report is due tonight at 12:30 pm GMT, and this could prove to be a major mover in the markets!

Last Friday, market sentiment soured due to the skepticism surrounding the euro zone situation and a very disappointing U.S. non-farm payrolls. AUD/USD closed the day at 1.0220, 69 pips lower from its opening price.

Euro zone’s permanent bailout fund, which is more commonly known as the European Stability Mechanism (ESM), is unlikely to begin as scheduled. Meanwhile, the U.S. non-farm payrolls failed to meet forecast and showed that only 80,000 people were added to the workforce. The market was expecting at least 97,000 people.

No major economic data released for the first part of the week but on Thursday, Australia’s jobs report will be published. The report is anticipated to show that the companies hired 3,000 (net) more people in June and that the unemployment rate rose to 5.2% from 5.1%. If the jobs report comes in better than expected like the last three versions, we could see the Aussie stage another bullish rally.

Phew! The Aussie bears hit the pause button yesterday as AUD/USD recovered from an intraday low of 1.0154 to 1.0203. Here’s why Australia’s data yesterday had nothing to do with the Aussie’s price action.

Okay, maybe the better-than-expected ANZ job ads spurred the Aussie bulls a bit, but I have to say that China’s inflation data might have influenced the comdolls’ price action more.

China’s consumer prices fell to a 29-month low, clocking in at an annualized rate of 2.2% in June. The cooler-than-expected inflation hinted at more room for the PBoC to stimulate the economy, which is often good news for commodity-producing countries like Australia.

The slightly weaker-than-expected NAB business confidence was already released today, so stay at the edge of your seats for China’s trade balance data also due today. Major Chinese data have the tendency to dominate comdoll price action, so make sure you have your trading plans ready!

The Aussie choked like Chael Sonnen in yesterday’s trading. It rallied against the dollar ahead of the London session and tapped an intraday high of 1.0246. However, the comdoll’s rally soon lost steam and AUD/USD dropped to close the day 15 pips below its opening price at 1.0187.

Aside from the market’s slightly risk averse environment, the NAB Business Confidence report for June didn’t bode well for the Aussie. The index printed lower at -3 than its previous reading of -2 and the statement indicated that the RBA’s most recent interest rate cut did very little to boost confidence. That’s bad news for Aussie bulls as the report could give the central bank one more reason to ease monetary policy even further.

But it might still be too early to jump to such conclusions. If you’re just looking to trade the Aussie for today, it would do you well to know about the reports that were released from the Land Down Under earlier.

The Westpac Consumer Sentiment report showed that financial confidence rose by 3.7% in July after being only at 0.3% in June. However, home loans for May contracted by 1.2%, erasing its 0.5% growth for April and disappointing the market’s 0.8% forecast.

Also, be sure you keep tabs on market sentiment, ayt? Keep in mind that the comdoll usually does well when risk appetite is up and it doesn’t mix well with risk aversion.

Who’s the king of pips? The Aussie is! Thanks to good economic data, AUD/USD jumped to an intraday high of 1.0282 before it leveled off to close 58 pips above its open price. What is this piece of good data and why did it boost the Aussie so much?

Yesterday the consumer confidence report clocked in a 3.7% growth for July. It’s not only higher than June’s 0.3% uptick, but it also marks the five-month high for the data. Booyeah!

Apparently, consumers are more optimistic on the economy after the RBA cut its rates to address Australia’s weakening housing industry. Add that to the strong building approvals, retail sales, and trade data that we saw last week and you got yourself an Aussie bull party!

But wait! Data released a couple of minutes ago reveals that employment isn’t one of the bright spots in the Land Down Under. Not only did the unemployment rate climb to 5.2% in June, but 27,000 workers actually lost their jobs! This is a disappointment for investors who weren’t expecting changes in both reports.

No other data is scheduled for release in Australia today, so you might want to keep an eye out for intraday trend continuations and reversals that might be inspired by the major employment report.

Avoid revenge trading, kids!

The Australian dollar got wiped out during yesterday’s wave of risk aversion, pushing AUD/USD to an intraday low of 1.0100 and dragging AUD/JPY closer to the 80.00 handle. Which reports caused the Aussie to go down under?

Weaker than expected jobs data from the Land Down Under triggered a massive AUD selloff yesterday as the employment change figure showed a 27K drop in hiring. Although their jobless rate came in as expected at 5.2%, the actual employment change reading was much worse than the estimated 0.2K increase in hiring.

This bleak jobs report led most traders to believe that another rate cut from the RBA might be in the cards as the central bank’s recent easing efforts don’t seem to be enough to prop up the Australian economy.

It didn’t help that traders were also pricing in downbeat expectations for today’s Chinese GDP release. After all, the Asian giant has been chalking up weaker than expected data recently, which means that their economic growth for the quarter could fall short of expectations as well. After growing by 8.1% during the first quarter of 2012, China is expecting only a 7.7% expansion for Q2. Make sure you keep an eye out for this release because it could dictate risk sentiment for the rest of the trading sessions. Good luck!

When there’s a will, there’s always a way. Thanks to the overall dollar weakness, the Aussie was able to reverse its losses from the day before on Friday. The Aussie closed the day at 1.0223, 83 pips higher from its opening price that day.

The dollar’s weakness was the result of China’s “not-so-weak” GDP report. While it did fail to meet expectations, it wasn’t as bad as everyone thought. It came in at 7.6% versus the 7.7% forecast.

No major news report was released on Friday from Australia and the country’s economic cupboard this week is also bare. This doesn’t mean that the Aussie won’t show any movement though. There are a lot of red flags on the U.S. economic calendar which could indirectly affect the Aussie. You can check out my U.S. daily economic roundup for that!

Now that the weekend gap got filled, AUD/USD resumed its rally and ended the day in the green as it closed at 1.0251. AUD/JPY, on the other hand, didn’t have such a good day as it chalked up a loss and closed at 80.83.

Australia didn’t release any economic reports yesterday, which means that AUD/USD’s gains were mostly a result of dollar weakness. After all, the U.S. printed worse than expected retail sales data, which had traders buzzing about the odds of QE3 again.

Today, the RBA is set to release the minutes of its latest monetary policy meeting and this report could shed some light on why the Australian central bank decided to keep rates on hold. It could also contain some clues on when the next rate cut could take place so make sure you read up on the minutes due 1:30 am GMT.

Don’t forget that Fed head Ben Bernanke is set to give a speech at 2:00 pm GMT today! Not only could this spark additional volatility across dollar pairs, it could also result in another dollar selloff if he starts talking about the need for further easing. Be careful out there!