The Australian economic calendar will continue to paint a bleak picture of the larger antipodean nation in the coming week. Aussie dollar price action is likely to fall in with broad macroeconomic themes. Last week saw AUDUSD retrace recent losses, with a resumption of the down trend expected in the near term.
Fundamental Outlook For Australian Dollar: Bearish
- RBA Says Rate Cuts To Start Sooner, Not Later
- Australian economic growth slowest in 8 years, says Westpac
- Vehicle Sales shrink -4.1% in the year to July
The Australian economic calendar will continue to paint a bleak picture of the larger antipodean nation in the coming week. Construction work is reasonably expected to decline as Building Approvals have fallen sharply over the first and second quarter. The metric is expected to print at 1.5% in the three months to June versus 2.3% in the preceding period. The Conference Board’s Leading Index is likely to continue lower in June having contracted -0.1% in May as the contributing portions of the composite reading all registered loses in the reference period. HIA New Home Sales surprised the markets last time with strong 4.0% growth in May, buoyed by rising immigration attracted by the boom in Australia’s mining industry. While another uptick is within the realm of possibility, it is unlikely to have a substantial impact on Australian dollar price action. Expectations call for the home sales to fall substantially as the year progresses: falling Building Approvals and Construction metrics mean that the supply of new real estate is being topped up at a substantially slower pace, suggesting sales growth will hit a wall after clearing current inventories.
On balance, Aussie dollar price action is likely to fall in with broad macroeconomic themes. Australian monetary authorities have gone out of their way to signal imminent interest rate cuts. Meanwhile, US Federal Reserve Chairman Ben Bernanke said current interest rates were “relatively low” in an speech delivered Friday. Bernanke went on to say that the Fed is “committed to achieving medium-term price stability and will act as necessary to obtain that objective”. The statement comes as US consumer prices grew the most in 17 years in the year to July. Last week saw AUDUSD retrace recent losses, with a resumption of the down trend expected in the near term. - IS
