Breaking through the range that has persisted for most of September, the Aussie dollar declined through the 0.7500 handle on three consecutive losing sessions. Ultimately finding support just above the 0.7425 figure, the weeks fundamental calendar may well be in line with price oscillators that are indicative of further downside in the intermediate term. The decline is likely to keep bullish traders focused on the upcoming 0.7400 in considering a bid on the imminent pullback.
However, leaning in favor of bearish undertones for the week, the schedule for the Australian dollar is expected to show continued slowdowns in the economy. First up, the market is likely to see a decline in the retail sales report for August. After rising 0.6 percent in the month of July, the monthly comparison is expected to rise by only 0.2 percent. Although speculation is likely to cast a pessimistic spin on the figure, the report is supportive further growth in the Pacific economy as this will be the third consecutive month of increases in consumer spending. Nonetheless, the figure is considerably lower than the previous rise and may give to some near term short speculation. Additionally, both building approvals and the AiG performance of manufacturing index surveys are expected to show declines. Although rising in the month of August, the AiG manufacturing survey is estimated to pullback slightly as overall growth is anticipated to slow down in the fourth quarter. Signs can already be suggested as the previous report showed mixed results on weakness in consumer goods and service sectors. Namely, growth slowed in the food and beverage, footwear and textile sectors. Subsequently, the lower building approvals figure is likely to decline on relational consumer pessimism in the month as the report is expected to dip by a whopping 3 percent after surging by 8.3 percent in the previous month. Although the housing sector remains supported, the pullback may be the beginning of a slight decline as the market becomes oversupplied at the moment. Nonetheless, the decline is likely to influence the Reserve Bank of Australia decision in midweek action, preceding the trade balance figure. With the trade deficit expected to remain around current levels, speculation may be heightened on the potential for a rate hike in the near term. Expectations are for the central bank to keep rates at the current 6 percent. However, with sentiment siding with at least one more rate hike before the year end, the decision may very well be a surprise as inflation continues to be an economic problem. Rounding out the week, will be the Cashcard retail index, which is widely considered to mimic previous general retail sales figures, and the NAB third quarter assessment. Although mostly weighing on the Australian dollar, the weeks reports may give a slight lift towards the end as the NAB report is likely to show continued growth expectations in to year end.
Comparative to the weeks full schedule, the previous weeks laundry list of data was rather thin. Aside from the Conference Boards July leading index for the Australian economy, trades were looking towards the TD securities inflationary report. According to the Conference Board, the leading index survey increased by 0.5 percent for the month spurred higher for the fifth consecutive month. Increasing building approvals and positive sales to inventories ratios continued to purport a higher figure for the economy, continuing the overall trend seen in the past several months. Although positive, the report did little to reverse some damage seen by the inflationary report in midweek action. According to the TD Securities inflationary gauge, monthly inflation was kept steady at a zero percent change following the 0.6 percent increase in the previous month. As a result, the annualized figure declined to a 3.1 percent pace compared to the previous surge of 3.8 percent. Still higher than the benchmark set by the Reserve Bank of Australia, the figure offers suggestions that price increases may be on the way out as the current rate approaches the upper band of the target. This notion will likely keep the relatively hawkish RBA on the sidelines when they next meet this week, dampening subsequent rate hike decisions in the near term. Separately, the job vacancies figure continued to purport a healthy employment picture as the amount of vacancies dipped less than expected by 0.8 percent on the consensus 2.5 percent expected.
