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AUD news

Moderators: mntiwana, mrtools

#1

Australia Westpac Consumer Confidence Rises 2.3% in February

A private measure of Australian consumer confidence rose at a faster pace last month, a sign recent job gains were translating into better views about personal finances and the economy.

The Westpac-Melbourne Institute survey of consumer sentiment rose 2.3% to 99.6 in February, following a gain of just 0.1% the previous month. The monthly indicator is based on a survey of 1,200 people that is administered during the first four days of the month.

A number below 100 signals that pessimists outweigh optimists.

Consumer sentiment is still feeling the lingering effects of a sharp slowdown in the economy last year. Gross domestic product (GDP) contracted unexpectedly in the third quarter amid broad weakness in the economy that extended to private investment and exports. However, the economy appears to have turned the corner in the final quarter of 2016, with inflation and employment running hotter.

Employment has increased sharply in recent months, with full-time jobs accelerating at a faster pace. The labor market ran into volatility last year, with part-time jobs far outweighing full-time employment in terms of overall growth.

The Australian Bureau of Statistics will release its latest batch of employment data on Thursday. Analysts in a median estimate say employers added 10,000 jobs last month, following a gain of 13,500 in December.
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#2

AUD/USD Turns Lower From Major Trendlines Resistance

AUD/USD has been under pressure since the Asian session following the latest Australian jobs report. The pair had turned higher on Wednesday shortly after the US CPI and retail sales release but turned lower following labor figures despite a continuation of the broader dollar decline.

The Australian employment change data indicated the end of a trend as the Australian Bureau of Statistics reported a staggering decline of 44,800 in full-time employment for January. The Reserve Bank of Australia had been expressing concerns for most of 2016 as employment gains derived mostly from part-time employment but expressed some hope in their latest statement with gains in the latter part of the year boosted by full-time employment. Part-time employment rose 58,300 to make a net gain of 13,500 versus the analyst consensus for an additional 9,700 employed people in January. The unemployment rate ticked back lower to 5.7% versus an expected and prior reading of 5.8%. The participation rate ticked lower to 64.6%.

AUD/USD displayed volatility following the release and briefly broke to fresh highs for the week. Gains were not sustained with a nearly immediate reversal to erase the rally resulting from the data. The pair has been under pressure since the jobs report despite a steady decline in the dollar from the turn in North American trading on Wednesday. The Australian Dollar is the weakest currency among the majors as of the European close, after posting the second largest gains on Wednesday. The Aussie has been the only currency that has been unable to gain against the greenback.
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#3

AUD/USD forecast for the week of February 20, 2017

The AUD/USD pair had a volatile week, essentially settling on neutrality. If we can break above the 0.7750 level however, that should send the market much higher. I think pullbacks will be attractive for buyers looking for value, so don’t have any interest in selling. I think that the 0.75 level underneath will end up being supportive, so having said that I don’t have any interest in shorting. Given enough time, we could break out and reach towards the 0.80 level as it has been so important on longer-term charts.

https://youtu.be/pdwwjCAaQeI

#4

Australia - ANZ / Roy Morgan Weekly Consumer Confidence: 113.7 (prior 116.4)

This is the weekly data on consumer sentiment from Australia. This for the week ended February 19

  • Falls again
  • Down for the 3rd consecutive week
  • At it lowest since December 2016
  • long run average is 112.8
Consumer views on their "current finances" down 7.5% to 101.6 (lowest since August of 2014)
  • Something to watch for an impact on consumer spending
  • Long run average is 101.6
  • Says ANZ: "Views on financial conditions have been trending down since the start of 2017 and have now dropped to around the long-run average ... the sub-index is closely correlated with consumer spending"

#5

RBA Minutes: Australia’s Economic Slowdown in Q3 Likely Temporary

Australia’s third quarter contraction was likely a one-off, reflecting temporary forces that are not expected to continue into the December quarter, the Reserve Bank of Australia (RBA) said in its February 7 policy meeting.

The 0.5% contraction in real GDP in the third quarter reflected “some temporary factors, including disruptions to coal supply and bad weather,” the minutes of the February policy meeting showed on Tuesday. “This weakness was not expected to have continued into the December quarter and the forecasts for quarterly GDP growth were little changed.”

The Reserve Bank voted to leave monetary policy on hold at the February meeting, opting instead to wait for more evidence of growth and inflation. The overnight rate has held at a record low of 1.5% since August.

Easy monetary policy helped make Australia one of the developed world’s fastest growing economies in the first half of 2016. However, the outlook soured in the second half of the year, with third quarter GDP contracting for the first time in five years.

The RBA maintains that the economy will grow around 3% annually over the next few years, as inflation gradually returns above its 2% target.

Although very few expect the RBA to adjust monetary policy anytime soon, some analysts have speculated that officials are more likely to cut rates before raising them. Despite the RBA’s claim, there is a difference of opinion whether the third quarter slowdown was a one-off or a sign of a more troubling trend emerging.
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#6

RBA Lowe: Some signs debt levels are affecting household spending

Reserve Bank of Australia Governor Philip Lowe:

  • Says policy balancing risks of low inflation vs high household debt
  • Does not see much risk of inflation expectations becoming unanchored
  • Does see risk that encouraging more borrowing would lead to consumer downturn
  • Households coping reasonably well with high debt, but is affecting spending
  • Would be case for quicker return to inflation target if unemployment were high and rising
  • Says, to date, satisfied that labour market heading in right direction
  • Says liaison suggests wages growth has bottomed, but a pick up is not imminent
  • Downturn in mining investment 90 pct done, non-mining investment still subdued
  • Repeats outlook is for 3 pct GDP growth next two years, gradual rise in inflation
 
The implications for policy are unclear (at least to me). Other indications from the bank are that they are reasonably sanguine on employment (growing, but slowly) and inflation (low but the RBA expects it to pick up into the target band) ... and don't forget that these are the two 'mandates' of the bank. So the Bank is not unhappy. But, yeah, Lowe notes concerns in today's speech:
  • high household debt holding back consume spending
  • slow wage growth (Lowe refers specifically to this, again)
  • non-mining investment subdued

Full text of his speech is here: Australia and Canada - Shared Experiences

#7

AUD/USD Trading with Modest Gain in Volatile Session

AUD/USD was hit hard on Thursday after the release of a weaker-than-expected reading on capital expenditure. Private capital expenditure – a leading indicator of economic activity – fell at a seasonally adjusted 2.1% in the three months to December, the Australian Bureau of Statistics reported on Thursday. Consensus estimate was for a 0.4% decline.

The December drop marked the fourth consecutive quarter of declining capex for Australian businesses. Capital expenditure is down in eight of the past nine quarters overall.

 

AUD/USD fell sharply on the news, but managed to find support at the lower boundary of the rising trend channel which has defined price action since early February. At present, the pair is off the lows of the session, trading at 0.7711, up 0.14% over Wednesday’s North American close.

Today’s recovery is taking place as the dollar remains under pressure following the release of the minutes of the January FOMC meeting. There was no clear directive in regards to an interest rate increase in March, a development which has caused selling in the dollar. The US dollar index is currently down 0.29% at 101.04.
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#8

AUD/USD forecast for the week of February 27, 2017, Technical Analysis

The AUD/USD pair had a volatile week, testing the 0.7750 level above. That’s an area that’s massively resistive, and with that we ended up forming a bit of a shooting star. If we can break above the top of that shooting star, the market should go higher. However, we have a hammer and a very neutral candle proceeding the shooting star, so I think this is simply going to be more grinding to the sideways direction. If we can break above the 0.7750 level, I feel that the Australian dollar then reach us towards the 0.80 level over the longer term.

https://youtu.be/LcweM6vP3W4

#9

Australia New Home Sales Decline in January: HIA

Australian new home sales declined in January, offering fresh evidence of a down cycle in the market that is expected to continue throughout the year.

The Housing Industry Association (HIA) reported that its monthly survey of large-volume builders showed new home sales fell 2.2% in January, following a gain of 0.2% the previous month.

After hitting a two-year low in October, new home sales recovered in the final two months of the year. HIA executive director recently said he expects the market to stabilize in 2017 thanks to the government’s ongoing support of the industry through the First Home Owners Grant. The Grant was established 17 years ago to offset the impact of GST on home ownership.

Since 1989, the government has also helped residents of Western Australia finance homes through low-deposit loans.

The gradual downtrend in new home sales is consistent with official data on building permits. Together, they both indicate that the first stage of the down cycle in housing commencements is under way. HIA expects the down cycle to begin in 2017.

Australian building permits fell 1.2% in December, their fourth decline in the past five months. Permits are down in seven of the last 12 months overall, including a more than 12% plunge in October.
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#10

Australia - Manufacturing PMI (February): 59.3 (prior 51.2)

Australian Industry Group Performance of Manufacturing Index

An 8.1 point jump in the month
To its highest since May of 2002
 
Key points from AiG:
  • fifth consecutive month of expansion
  • Six of the seven activity sub-indexes expanded in February (seasonally adjusted)
  • Encouragingly for the outlook, new orders (60.6 points) and sales (55.3 points) grew strongly. Production jumped from stable conditions in January to a strong expansion (65.3 points), as did employment (57.5 points). Deliveries lifted out of contraction (56.3 points) while exports strengthened further (57.0 points). Reflecting this surge in demand, inventories contracted mildly in the month (48.3 points). ?
  • Seven of the eight sub-sectors improved in February (trend)
  • Food & beverages posted a strong result (58.8 points), as did non-metallic mineral products (66.3 points) and machinery & equipment (60.1 points), all building on expansions in January. Metal products (56.1 points) and petroleum, coal & chemical products (53.0 points) continued expanding well, while wood & paper products recovered from contraction (51.9 points). Only printing & recorded media remained in the doldrums (45.1 points). ?
  • Comments from manufacturers in February indicate that demand looks to be increasing and confidence returning to some of the larger sub-sectors such as food processing and machinery and equipment (other than auto).
  • Exports are continuing to provide a good source of growth, as are large transport infrastructure projects and increased activity in parts of mining and agriculture in response to the recovery in prices for bulk commodities, wool and some grains.
  • On the inputs side, energy costs and energy reliability are posing a significant threat to ongoing profitability and viability for some manufacturers. Rising raw materials costs and supply constraints are causing increased price pressure and delaying some supplies. Also, intense competition is continuing, particularly from overseas firms.




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