AUD news - page 14
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Australia - manufacturing PMI for November: 54.2 (prior 50.9)
Australian Industry Group Performance of Manufacturing Index
Comments from manufacturers in November indicate a general pickup in demand and confidence, while the relatively lower dollar and increased exports continue to provide momentum to many manufacturers. Weather conditions appear to be impacting manufactures, both directly and through increased raw material prices. Also, some concerns of a slowing economy and a volatile exchange rate are weighting on activity while sourcing affordable, skilled labour and rising input costs (inducing energy prices) are presenting problems for other manufacturers.
source
Australia - Retail sales for October: +0.5% m/m (expected +0.3%)
Australian retail sales data for October up 0.5%, a beat
Australian Retail Sales Rise for Third Consecutive Month in October
Australian retail sales rose for the third consecutive month in October, pointing to sustained growth in consumer spending.
Retail sales rose at a seasonally adjusted 0.5% to $25.616 billion, following a gain of 0.6% in September that was the fastest in over a year, the national statistics bureau reported Friday. A median estimate of economists forecast retail spending to grow 0.3% in October.
Retail sales are an important proxy for consumer spending, which accounts for more than half of Australia’s gross domestic product (GDP).
Gains were led by food retailing, household goods and cafes and restaurants, which offset declines at department stores and clothing retailers. Growth was strongest in Queensland, Victoria and South Wales.
Retail spending has grown in stops and starts over the past year, but hasn’t declined since August 2015. The recent pickup in spending bodes well for a surge in sales heading into the Christmas season. Such a trend would be consistent with the strength seen in recent consumer confidence data.
The Reserve Bank of Australia (RBA) says consumer spending has been expanding at a reasonable pace, but appears to have slowed recently. This was observed especially in the month of July, where Malcolm Turnbull’s coalition party narrowly retained power in the federal election.
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AUD/USD Gains Upside Momentum Following NFP Data
AUD/USD was relatively unaffected immediately after US jobs report today but advanced within a recovery from yesterday’s lows shortly after the release.
The jobs report indicated an employment gain of 178,000 for November falling relatively in line with expectations. The unemployment rate dropped to a nine year low at 4.6% from the prior 4.9% and the average hourly earnings declined 0.1% versus an estimate of a rise of 0.2%.
Expectations for a rate hike this month remain intact following the jobs report. The short fall in average hourly earnings combined with an unchanged reading in the annual core PCE price index earlier this week will tend to dampen expectations for a sharper rise in inflation next year while the notable drop in the unemployment rate is expected to create upward price pressure as the figure is well below what the Fed views as full employment. The participation rate ticked lower to 62.7% from 62.8% and will have had some impact on the unemployment rate.
The US Dollar index (DXY) experienced volatility after the NFP release. An initial spike lower was followed by a rally to fresh daily highs. The rally was not sustained as a turn lower shows DXY attacking lows on the day once again.
Out of Australia, retail sales rose 0.5% in October to beat the analyst expected rise of 0.3% and against a prior rise of 0.6%. The data was released in the Asian session and had little impact on the exchange rate.
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AUD/USD Weekly Forecast: Mixed Influences Continue, Risk Trends Crucial
There are likely to be further doubts surrounding the domestic Australian economy after a run of poor data releases. In contrast, strong commodity prices will provide important underlying support and, assuming the Reserve Bank of Australia holds monetary policy steady, trends in risk appetite and the US dollar will tend to be the dominant factors. For now, the downside should be limited, although with the potential for very choppy trading conditions.
There were very mixed data releases in the current week, which continued to create additional uncertainty surrounding the outlook, although there were further concerns surrounding the domestic economy.
The new home sales data recorded a sharp decline of 8.5% with a 12.6% decline in building approvals and 4.0% decline in capital expenditure. In contrast, there was a slightly stronger than expected release for retail sales, although the most notable release was data on commodity prices with a 32.1% gain in the year to November from a revised 15.3% the previous month.
The Reserve Bank of Australia will announce its latest policy decision on Tuesday local time and there are strong expectations that policy will be left on hold. Forward guidance within the statement will have an important impact with a notable focus on commentary surrounding the inflation outlook. Any rhetoric surrounding the Australian dollar will also have an important impact.
The third-quarter GDP data will also be important on Wednesday with a particular focus on the balance between the domestic and resources sectors.
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Services PMI from Australia for November: 51.1 (prior 50.5)
Australia - BoP Current Account Balance for Q3: $A -11.4bn (expected $A -13.5bn)
BoP Current Account Balance for Q3: $A -11.4bn . Deficit narrower than expected.
Australia Q3 GDP: -0.5% q/q (expected -0.1%, prior +0.5%)
September quarter GDP from Australia
AUD/USD forecast for the week of December 12, 2016
The Australian dollar held a fairly quiet week as we chomped around is below the 0.75 area. This is what we did last week as well, so I have to think that there is significant resistance there. If we can break down below the 0.7450 level below, the market will more than likely rollover, reaching towards the 0.73 level and then the 0.70 level. Alternately, we can break above the 0.75 handle, I think that the market will probably test the bottom of the previous uptrend line that is drawn on this chart.
Australian Economy Likely To Recover From Shock Third-Quarter Contraction
Although there has been very poor data since early November and a third-quarter GDP contraction, the Australian economy should recover, especially with Chinese demand holding firm in the short term. There will be more substantial risks later in 2017 if US inflation rises sharply.
There has been a notably bad run of Australian data over the past few weeks, which has triggered fresh concerns surrounding the overall economic outlook and the possibility of a recession.
In the final week of November, Australia reported a 4.9% decline in construction work done for the quarter and an 8.5% decline in new-home sales while building approvals fell 12.6% for October following a revised 9.3% slide the previous month. Private capital expenditure declined 4.0% in the third quarter after a revised 5.2% decline the previous quarter.
The very poor run of growth-related data culminated in a reported GDP decline of 0.50% for the third quarter compared with an expected increase of 0.2% for the quarter. This was the first contraction for five years and the steepest decline in since 2008.
The only significant positive release came from an increase in the PMI manufacturing index, although the services PMI index also registered a small gain for November.
The dismal run continued on Thursday with the trade deficit widening to AUD1.54bn for October from AUD1.27bn the previous month and more than double the expected deficit. Australia has not suffered a technical recession of two consecutive quarters for 25 years, but the third-quarter GDP release and run of notably poor data will undermine confidence.
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