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The Aussie caps off the week as a net winner, riding higher thanks to optimism on the global trade outlook, and on another rate hold from the Reserve Bank of Australia.
Australian Headlines and Economic data
Monday:
- Australian house prices record biggest monthly rise since 2003
- Aussie manufacturing output hits 3-year low
- Australia building approvals nosedived by a shockingly large 8.1% in October
- Australian job ads fall 1.7 per cent in November: ANZ
- Australia business company profits (SA) -0.8%
- Strong start to the week for Aussie bulls despite the arguably net negative batch of Australian economic data updates listed above. It’s possible that traders were bullish on the Aussie after positive news from China that included a better-than-expected read on Chinese manufacturing activity from over the weekend, as well as news that China spared trade in their first retaliation to the U.S.’s Hong Kong law.
Tuesday:
- Australia’s ANZ-Roy Morgan Consumer Confidence up to 108.1
- Reserve Bank of Australia has left the official cash rate at 0.75%
- RBA to cut rates in February, then “move to a form of Quantitative Easing” – Westpac
- After the boost from the RBA rate hold earlier in the session, the Aussie turned back to the downside, likely on global risk sentiment which leaned towards negative on the session. This is likely in reaction to Trump’s comments that the China trade deal has ‘no deadline’ and that it could possibly come after next year’s U.S. elections. Comments that the U.S. may propose tariffs on French goods was also likely a contributor to negative global risk sentiment.
Wednesday:
- Australia AIG services index fell from 54.2 to 53.7
- Australian GDP at 0.4% vs. 0.5% expected in Q3 2019
- Commonwealth Bank survey shows Australian services activity falls in November amid subdued sales growth
- The Aussie dollar slipped during the Asia session on the slew of negative economic updates above and , but found a bottom and quickly reversed back to the upside on rising global risk sentiment on a positive manufacturing survey read from China (Chinese Caixin services PMI up from 51.1 to 53.5 vs. 51.2 forecast in Nov) and net positive business sentiment reads from Europe, especially Germany (German business activity growth ticks higher but remains modest)
Thursday:
- Australian retail sales flatline in October as shoppers close wallets
- Australia’s trade surplus drops by a third to $4.5B
Friday:
- Australia AIG construction index down from 43.9 to 40.0
- The Aussie manages to grab a few more pips against the rest of the majors ahead of the weekend, likely on news that China will waive tariffs on some U.S. soybeans and pork in goodwill gesture towards reaching a trade deal.