A lot of the Aussie’s moves last week centered around economic releases, so y’all better pay attention to this week’s lineup! Here’s what’s up for the comdoll.
Australia’s jobs numbers (Jan 18, 12:30 am GMT)
On Thursday we’ll see if Australia has maintained its strong labour market growth. If you recall, the Aussie popped last month when the report showed a massive 16,000 net increase in jobs added for November.
While market players are expecting the unemployment rate to remain at 5.4% in December, they also believe that we’ll only see a net increase of 15,000 added jobs this time around.
Keep your eyes on the increase in full-time positions as well as the increase in net hours worked to get clues on the sustainability of the labour market’s improvements!
China’s data dump (Jan 18, 7:00 am GMT)
At the heels of Australia’s jobs report is China printing a slew of top-tier economic reports. 2017 GDP is expected to come in at 6.7%, a tad lower than the 6.8% we saw in Q3.
Annualized industrial production (6.1%) and retail sales (10.2%) are expected to keep their growth rates, while fixed asset investment (ytd/y) could dip from 7.2% to 7.1% in December.
Oh, and note that China’s statistics bureau is conducting a presser around the release. Watch out for any remarks regarding the impact of the government’s efforts to crack down on pollution and risky funding on overall economic growth!
Last Week’s Price Review
The Aussie is a net winner for the week (as of 7:00 am GMT) and is even currently poised to finish as the third best-performing currency of the week.
Gold is having a good time this week. But as you can see in the overlay of AUD pairs above, most AUD pairs initially took directional cues from gold but became more mixed when Wednesday rolled around. This means that the Aussie became vulnerable to opposing currency price action on Wednesday. There was no clear reason as to why, though.
Anyhow, the Aussie’s price action became uniform again come Wednesday when the Aussie jumped higher across the board after Australia released its November retail sales report since the report revealed that the total value of retail sales in Australia surged by 1.2% month-on-month (+0.4% expected, +0.5% previous).
After that, price action on the Aussie became mixed again since the Aussie steadied against the Greenback while losing out to the Swissy and the yen and winning out against the rest. However, the Aussie encountered broad-based selling pressure later at around 12:00 pm GMT.
Oddly enough, only the minutes of the December ECB meeting were the only catalysts at the time, so its possible that bullish pressure on EUR/AUD and bearish pressure on AUD/CHF may have dragged other Aussie pairs lower. Although I don’t really have any corroborating evidence on that and most market analysts just prefer to be silent on the Aussie’s slump in the wake of the ECB minutes.
Another probable reason is that European equities took a dive after the ECB minutes were released, which means that risk aversion returned. Risk sentiment also helps to explain why the Aussie recovered later during the U.S. session since risk appetite made a comeback then.
And while iron ore did slide starting on Thursday because of weaker winter demand, market analysts say, we can’t really pin the Aussie’s slide on the iron ore slump since the Aussie started moving lower about two hours before iron ore did. In fact, the Aussie started to find support on most pairs even as iron ore plumbed new intraday lows. So yeah, the iron ore slump wasn’t to blame.
Whatever really caused the Aussie to weaken on Thursday at around 12:00 pm GMT, the fact still remains that the Aussie did weaken. But as mentioned earlier, the Aussie later recovered after the broad-based weakness and then proceeded to trade roughly sideways.