AUD

The Index was released as a contracting indicator for the 4th consecutive month at 47.5, better than the prior release of 46.6. The weak reading was attributed to a reduction in fiscal stimulus and uncertainty on the political front, the AUD and the market in general has a muted reaction to this release as everyone’s attention is focused on tomorrow mornings US employment report.

After trading continually lower so far this session, the AUD/USD pair appears to have found some support from the 23.6% on the move from the low on August 31st to today’s high. As shown on the hourly chart below, the pair has tested the level twice, which comes in at .90538, but has not been able to break through to the downside. If support holds, the next target to the topside is the 0.0% line at .91140. A close below may be a bearish signal for the pair in which we may look for it to trade down to the 38.2% line at .90165.

The AUD traded slightly higher after Australia’s July commodity prices (y/y) came in at 52.7%; better than the prior release of 51.0%. The Aussie dollar is currently trading off session highs against the USD.

The 2nd quarter Gross Domestic Product report from Down Under came in better than expected, once again underlining the global demand for commodities and the strength of the mining industry, as well as the relative strength of the Australian consumer and housing markets. The AUD/USD popped through the .8930 level where we saw some resistance earlier and is moving toward the 90 cent handle following the release.

• GDP (QoQ) - Survey:0.9%   Actual:1.2%   Prior:0.5%
• GDP (YoY) - Survey:2.8%   Actual:3.3%   Prior:2.7%

The AUD gained some strength after the 2Q current account balance came in at -5654M ; better than the prior reading of -16551M and survey of -6500M.  The following data was also released at the same time:

• Net Exports (of GDP) - Survey: 0.3   Actual: 0.4   Prior: -0.5
• Retail Sales (m/m) - Survey: 0.45   Actual:   Prior: 0.2%
• Private Sector Credit (m/m) - Survey: 0.3%   Actual: 0.1%   Prior: 0.2%

The AUD is currently trading on session highs against the USD.

Australia’s July new home sales came in at -7.0%; worse than the prior release of -5.1%. Risk trades have come off as the lack of economic releases have caused a quiet session thus far.

Australia’s cap ex for June came in at 2.3%; up from -0.2% the prior month. The AUD is currently trading off session lows against the USD.

Australia’s Conference Board Leading Index, for June, came in at 0.1%; lower than the prior reading of 0.3%. The market had a limited reaction to the release.

Speaking in Brisbane, the RBA’s Ric Battellino made the following comments:

• Australia must be alert to inflation risk.
• Mining investment is already 4.25% of GDP, set to rise.
• Australian economy is operating close to capacity.
• Inflation may be a smaller problem in this boom.
• Consumer spending subdued, even as confidence is high.
• Business investment is very high, likely to accelerate.
• Australia needs disciplined policies for growth.
• Sees world growth slowdown, accelerating inflation as risks.

The Aussie wage price index for Q2 came in at 0.8%; slightly lower than the forecast and prior reading of 0.9%. The AUD made a new session low of .9025 following the release.