Economic data was not in short order last week, but it will be a little less significant in the coming days with a leading indicator index heading up lesser employment, housing and vehicles sales reads. What would otherwise be sufficient for driving Aussie fundamental trades, the scheduled data for the week may not be potent enough to pull the currency out of its month-long downtrend against the US dollar. Wednesdays session will offer the first releases with the Westpac composite index and the DEWR vacancies report. Printing first, the leading composite index will offer a rather lagging read of April indicators that project growth three to nine months in the future.
Since Marchs 1.9% rise, which puts the annualized measure up to 4.7% and well above the long-term 3.8% trend, expectations of an exports rebound began to materialize. With commodities prices soaring through the much of the month, material producers revenues are expected to have circulated back into the economy. For the labor indicator, optimism due to the unexpected dip in the jobless rate to 4.7% in May could be unraveled by the drop in service and manufacturing activity for the same month. Closing the week early the following day, first quarter dwelling starts and May vehicle sales will cap Aussie-side positioning. Housing starts though the first three months of the year are expected to have reduced their declining pace as prices rose only moderately by 1.0% on an annualized basis and employment and wage growth supplied the financial means purchase homes. Finally, new auto sales for last month are expected to make a repeat 0.5% showing. While a confident consumer would be well inclined to meet this mark, some attention will granted the elevated prices of gasoline at the time which could park the actual read short of expectations. Also, aussie traders will keep a close eye on key commodity prices over the coming days and beyond. The value of goods like copper, gold and other commodities have been experiencing sharp retracements in price in the past weeks, which directly threatens the export-dependant economy.
After a barrage of indicators last week, the negative bias on the Australian currency was well ensconced. So much so as to facilitate a 150-point decline by the periods low. First out of the gates early Monday was the Manpower Employment Outlook survey for the third quarter forecasted the lowest expected increase in hires in over a year. While the obvious mining and construction jobs will continue to benefit from the lagged effects of strong commodity earnings; areas like finance, manufacturing and public administration are predicted to slow markedly. The other release for the day had already set the Manpower survey on the path to fulfillment. According to National Australias business survey for May, confidence among top execs edged lower on the unexpected interest rate hike from the Reserve Bank of Australia. Following the releases, the currency erased 70 points of value. Consumer confidence was the next chance to halt the units decline, but it only aggravated it when June optimism slipped 0.5%. Wednesday was the final fundamental day for the aussie to rally on. Nearly every indicator that printed however, worsened the units appeal. First off, consumer inflation expectations forecasted an average 4.0% rise, down from Mays 4.2% peg, while those expecting inflation to remain within the central banks target reached a 20%, four month high. While this is good for consumers, it is not good for currency traders as it suggests the RBA will have less reason to raise rates in the months to come. Up next was a read on trade prices for the first quarter. Imports rose1.3% over the period as energy imports increased the overall read. Making the rise expensive foreign goods more bearable however were exports over the same period, which soared 5.0% to easily fund the imports cost. Finally, the quarterly measurement of producer prices for the span of the first three months reported slower increases than expectations and the period before. Firms rose prices only 0.7%, choosing to absorb the higher costs with their high revenues rather than trying to pass the expense to potentially unwilling consumers. This proved a benefit for the consumer and at the same time didnt prevent the inevitable rate hike a few months later. By Fridays close, the AUD/USD was down nearly 95 points from where it started the week.
