Kept in a range for the week, the Australian dollar was bound by a tight 50 basis point channel constructed by 0.7550 and 0.7500 figures. Comparatively, the weeks price action was quite in contrast to the precipitous decline a week prior through the 0.7700 figure as the market pared back on long Aussie positions in favor of US dollar backed positions.
However, the weeks schedule looks Aussie mixed as the lone key data report may re-spark sentiment of higher interest rates, at least in the interim. Sparking off the weeks reports will be the Westpac leading index for July. Although expectations are non-existent at this point, consensus sentiment is leading towards another positive print compared to Junes reading. For the month, the leading index jumped higher by 5.3 percent and followed a 4.2 percent rise in the month of May. A positive read for the current month running would continue the uptrend and confirm recent speculation of further rate hikes in the near future. However, in addition to the Westpac report will be a handful of surveys that add to the contrary. Subsequent to the leading index report will be the DEWR skilled vacancies survey. Dipping in the month of August the report is expected to continue the downtrend in the month of September as vacancies for professional positions have been on the decline, although remaining up on the year overall. A thin suggestion at most, the figure would lay concerns of lower employment prospects in the economy and coincide with a weaker than expected HIA new home sales report anticipated for weeks end, leading to some trailing weakness. According to the Housing Industry Association, the number of new homes sold in the month of July dropped 3.6 percent ahead of the recent Reserve Bank of Australia decision. The fourth consecutive monthly decline, the report continues to indicate the unwillingness of consumers to buy homes in the face of rising interest rates. Preceding the HIA survey will be a rather mixed new motor sales report and the Reserve Bank of Australia bulletin. As usual, the bulletin will be scoured for any signs of rising economic expansion to further the current sentiment of higher interest rates in the Pacific Rims fifth largest economy.
In similar fashion, data for the week was rather mixed with the schedule holding quite a few sentiment surveys rather than quantitative figures for the Aussie trader. Sparking off the weeks list was a positive employment outlook for the Australian economy issued by the Manpower employment outlook for the fourth quarter. Mentioned in the quarterly survey, the economy was pitted for rising employment growth in the quarter on higher overall productivity. Supporting sentiment of higher interest rates, the survey results were quickly countered by the National Australia Banks business survey and the AiG/HIA performance of construction report. Both surveys declined as the business survey emphasized the negative effects of higher interest rates on businesses already ill-effected by increased energy costs. Higher costs tend to erode at corporate bottom lines and profitability, making it more difficult for businesses to increase spending and internal investment. However, consumers seem to disagree with current conditions as reflected through Septembers Westpac consumer confidence survey. According to the survey, which was boosted higher by a whopping 12.5 percent on the month, individuals seem to have accepted higher interest rates and grown concerned over higher energy costs. However, with costs slightly lower on the month, consumers feeling comfortable about the level are indicating rising optimism. The sentiment could translate into a continuation of recently positive retail sales figures, bolstering the possibility of growth expansions. Rounding out the week were improved dwelling starts data. Expected to have dipped by 5 percent, the figure declined only slightly by 2.3 percent.
