The Aussie calendar is returning to its usual anemic self, but the damage seems to have already been done to the currency. In the aftermath of a fully stocked indicator docket, the Australian currency has hit lows against the benchmark US dollar not seen in a month and a half. Looking to the data inventory ahead, few indicators seem to have the market moving potential to put the Aussie dollar back at highs reached only a few days before.
True fundamental trading starts off late Monday in Australia with the Manpower Employment Outlook for the fourth quarter. Given the strong employment numbers over the past four months through August, a positive skew is likely to find its way into the proprietary prediction. More general themes likely to play a lead role in the forecast will be the state of the mining and raw material export sector as prices for commodities recede and Chinese officials make a concerted effort to stifle growth. Moving on, not a few hours later the Reserve Bank of Australia will release its annual report. Due to the proximity of last weeks RBA meeting and its supplementary remarks, the importance of this document could be dampened somewhat. On the other hand, it will provide a clear interpretation of what policy makers are looking for in the months to come in order to determine the need for monetary stringency or easing. The same day, National Australia Bank (not to be confused with the central bank) will release its August survey of business confidence. Business leaders will decide whether strong consumer demand or bleak expectations for exports will take precedence in their monthly evaluations. Then on Thursday, the same confidence levels will be interpreted from the otherside of the picket line. Consumer confidence in September, as measured by Westpac, should respond to the strong employment trends, healthy wages and easing in gasoline prices to report a more optimistic Australian population. Finally, finishing out the quarterly reports, dwelling starts for the three months ending in June are expected to drop 5.0 percent. Such expectations seem low with building permits on the rise for two of the three months and a jump in construction work over the same period. In terms of price action, the effectiveness of the weeks data will hinge on its ability to breech the 0.7550 level against the US dollar which had offered serious resistance in the past and was support for the past month. With a lack of weighty data however, and trading liquidity picking up quickly, this may be a difficult hurdle to clear.
Last weeks data flow was the heaviest it has been in recent history. This would normally be seen as a good thing for those trading the Australian currency, but the mixture of low volatility with traders around the world on vacation and a sizable range becoming suspect, the data held the potential for turning the remaining market participants into irrational bears. The week started quickly with inflation, building approvals and company profits and inventories shaking the market to life. Initially, all of these numbers were positive and the AUDUSD responded as such by rallying 60 points to a 4-month high. August inflation was the most market moving of the sessions data as it played into the impending rate decision due just days later. According to TD Securities statistics, prices accelerated 0.6 percent on the month and 3.8 percent from a year ago. Both were better than the year before and beyond the unofficial consensus whispered around the market. Building approvals for July were also noteworthy with a huge 8.3 percent increase from the month prior while quarterly profits at Aussie companies soared a far greater than expected 3.3 percent in the three months up to June. Tuesday passed with little interest as only a slight drop in a services activity index from AiG captured the markets interest. The real data came with Wednesdays RBA rate decision. Though economists were agreeing on a rate pass, there was a generous amount of speculation behind another hike with the earlier inflation data. But, as expected rates were held at 6.00 percent and policy officials held the door open for the future. After this report the Aussie dollar started to slip, looking all of the sudden precariously high. The stumble and fall came Thursday with a unexpected drop in second quarter growth. For the three months, GDP expected only 0.3 percent, versus expectations of a 0.7 percent pace; and annually only reaching 1.9 percent versus 2.6 percent predicted. This highly unexpected with the state of business and consumer growth over the months, and was meaningful enough to over power a strong 23,400 person addition to national payrolls and a nudge higher in a proprietary retail index for August. After the full effects were felt, the AUDUSD was down 100 points around 0.7575 staring down the support level that has made up the month-and-a-half long range. The ranges eventual breach came just hours later on generally bullish news. The trade defiicnt shrunk to A$588 million, home loans grew a greater than expected 0.9 percent and exports alone grew to A$17.83 billion all in July. Despite this, the move through 0.7550 was not ignored, and many were left looking forward to the week ahead for guidance into whether an official break had occurred or if this was an exaggerated stop flushing with the return of big bank traders.
