Last week’s price action was a mixed bag of nuts that resulted to another losing week for the Aussie. What’s in store for the comdoll this week?
Employment data (Sept. 13, 1:30 am GMT)
A net of 3,900 workers had lost their jobs back in July, which was waaay weaker than the 15,000 uptick that many had expected.
On the bright side, full-time employment and those who were looking for full-time work had eclipsed part-time numbers and hinted of a more stable source of consumer spending for the Australians.
This week market geeks expect to see a net gain of 18,400 for the month of August.
Meanwhile, the unemployment rate is expected to remain at 5.3% and participation rate is expected to tick higher from 65.5% to 65.6%.
Keep your eyes peeled for the breakdown in part-time and full-time work, as it could make or break headline numbers like it did in last month’s release.
Overall risk appetite
Much like the Kiwi, the high-yielding Aussie is one of the biggest targets for the bears in times of risk aversion.
This week pay close attention to the U.S. and its trade negotiations with key partners such as Canada and China. Heck, throw in Japan into the mix in case last week’s rumors have gain traction!
Any cause for uncertainty will likely drag the Aussie lower, so y’all be on your toes for related headlines that might affect the comdoll!
Last Week’s Price Review
The Aussie is currently the third biggest loser of the week (as of 6:00 am GMT), so the Aussie is apparently headed for its fifth consecutive week of net losses.
The Aussie’s price action looks a bit messy and many AUD pairs didn’t stray too far away from last week’s closing prices (dashed horizontal line). Also, the Aussie was actually a net winner for most of the week and only became a net loser because of the selling pressure on Friday.
With that said, most AUD pairs were taking cues from gold prices as usual. But like last week, the Aussie’s correlation to the yuan is a bit tighter.
And like last week, AUD pairs didn’t take their marching orders only from gold and the yuan since there are clear instances when the Aussie temporarily decoupled from both the yuan and gold.
The first instance happened on Tuesday. And as marked in the overlay above and as noted in Tuesday’s Asian session recap, that was due to the RBA’s monetary policy statement since the RBA retained its relatively upbeat outlook and didn’t really change much of its language. Heck the RBA even noted that the “improvement in the economy should see some further lift in wages growth over time.”
More importantly, the RBA didn’t seem to mind that Westpac announced last week that it will hike rates on variable home loans.
And as noted in last week’s AUD recap, Westpac’s announcement was one of the major reasons why the Aussie was last week’s biggest loser since Westpac is one of the so-called “Big Four” banks in Australia. And concerns grew if the rest of the “Big Four” follow Westpac’s example, then the RBA may decide to delay hiking rate since hiking rates will only hurt consumers and may even lead to a potential housing market problem.
But since the RBA didn’t seem to mind, that likely triggered some relief buying and/or short-covering, causing the Aussie to spike higher.
Unfortunately for the Aussie, the Greenback was on the offensive at the time and both gold and the yuan were on the defensive, so the Aussie eventually gave back its RBA-induced gains on most pairs.
Moving on, the other instance when the Aussie decoupled from the yuan is when Australia’s GDP report was released. And as explained in Wednesday’s Asian session recap, that’s because the Australia’s GDP grew at a faster-than-expected quarterly pace, while also printing a 3.4% year-on-year increase, which is the strongest annual reading since Q3 2012.
The Aussie’s slide was only limited, however, and the Aussie would even recover a bit before becoming more mixed when the Greenback weakened and signs of returning appetite for risk began to show during Wednesday’s London session.
Anyhow, the Aussie would later get a broad-based bearish kick on Thursday, apparently because ANZ and CBA, two of the so-called “Big Four” Australian banks, announced that they will also hike rates on variable home loans.
Fortunately for the Aussie, gold and the yuan were turning higher. Also, risk-taking returned during Thursday’s morning London session, so the Aussie eventually regained its footing.
Risk aversion returned during Thursday’s U.S. session, though, so the Aussie began to feel some bearish pressure again.
And the risk-off vibes refused to go away on Friday and the yuan began to turn lower due to expectations that the U.S. may slap tariffs on $200 billion worth of Chinese goods, so the Aussie eventually yielded to the selling pressure.