AUD/USD news - page 11
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Aussie to Suffer Heavily with China's PMI Falling to Doom
With the China's manufacturing activity gauge falling short of expectations and moving into the contraction territory in January, likelyhood of the commodity currencies, especially Australian dollar, suffering is high.
The manufacturing PMI in January fell to to 49.8 in January from 50.1 in December, the data released Sunday by the China's statistics bureau and the China Federation of Logistics and Purchasing in Beijing showed. The manufacturing PMI indicate contraction in the industry for the first time since September 2012
"Commodity related currencies (particularly the AUD) are likely to suffer further fallout. January has already seen a further 9% fall in the iron ore price, which is consistent with renewed weakness in Chinese manufacturing during this month," Jonathan Cavenagh, forex market analyst with Westpac in Singapore wrote in a note on Sunday.
While the Australian dollar is seen as a biggest loser, other Asian currencies like MYR, KRW, SGD and TWD are also likely to trade weaker against the USD in the near term.
"Most recent data prints suggest we are unlikely to see a great deal of further improvement in China data outcomes over the coming weeks/month," Cavenagh further noted.
Weakening in China’s outlook is likely to provide a reason for further stimulus, similarly to what happened bank in September 2012. In fact when the PMI last fell below 50.0, it was only a matter of days before a large-scale fiscal stimulus package was announced by the Chinese authorities (around 1 trillion yuan or 150-160bn in USD terms).
With simulus in polace in China, the Australian dollar rallied back in September 2012.
"We need to be aware of the potential for such an occurrence again in the context of the current situation," Cavenagh further points out.
"Firstly, the current Chinese administration appears to be much more reluctant to deliver large scale ‘shock and awe’ stimulus compared to the previous administration. Secondly, the recent data momentum had, until last week, been reasonably constructive (better IP , GDP etc). Hence the authorities may wish to wait for further evidence in terms of the extent of the slowdown before deciding to act," Cavenagh concludes.
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Australian Jobseekers Set for More Disappointment
The weak outlook for Australia's economy is expected to continue taking its toll on the job market for some time, economists expect, with tomorrow's official labor data likely to highlight the difficulty in boosting job growth amid an economic transition.
Australia's jobless rate is forecast to have risen from 6.1% to 6.2% in January, while net job growth is expected to have fallen by almost 5,000 - a big turnaround from the 37,400 jobs added in December.
While the unemployment rate has tended to be volatile lately, most economists agree than it is going to be a while before the labor market sees any significant improvement.
On February 3 the Reserve Bank of Australia (RBA) decided that the weak outlook was enough to prompt an easing in interest rates. The bank slashed the benchmark cash rate to a record low 2.25%, putting an end to the bank's 18-month 'on hold' stance.
"Overall, the Bank's assessment is that output growth will probably remain a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected," RBA Governor Glenn Stevens said in a statement last Tuesday.
The steep fall in job growth stems from Australia's transition out of a decade long mining boom, which has led to a number of lay offs across many industries.
"A number of indicators suggest that conditions remained soft in the labor market, consistent with a continuation of below-trend growth in economic activity," the RBA pointed out on Friday in the bank's Statement on Monetary Policy (SMP). "Although employment growth picked up, spare capacity continued to increase over 2014."
The RBA said that while leading indicators of labor demand have picked up a little since late 2013, they still point to only modest employment growth over coming quarters, indicating that the unemployment rate is forecast to stay above 6% for the time being.
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AUD/USD: Aussie Erases Daily Gains, $0.78 Too Rich for Bulls
The aussie lost its daily gains and fell back to unchanged levels on Friday, despite the commodity sector trading in positive territory. The Australian dollar was supported earlier in the session by the Reserve Bank of Australia Governor Glenn Stevens' speech. This strength faded quickly and investors sold the rally when it neared the $0.78 resistance.
The pair fell around 70 pips from its highs and was trading around $0.7720 ahead of the US session.
"It is worth noting that, despite concerns at various times about whether the exchange rate would adjust appropriately to our changing circumstances, it has been doing so over the period since we last met with the Committee," Stevens said in a speech to the House of Representatives' Standing Committee on Economics in Canberra on Friday.
US macro still solid
Later in the session, the University of Michigan's consumer confidence indicator will be published, with analysts predicting the reading will be just shy of 100. The macroeconomic trend is still positive in the US, despite yesterday's miserable retail sales, and it should still boost the greenback against other currencies.
"Today’s consumer sentiment data for February will provide further information on how consumer attitudes are progressing. Our best guess is that consumer sentiment improved further this month. In general, barring any outsized decline in confidence, the combination of strong income and employment gains means the consumer is in excellent financial health. Indeed, the trend in consumer confidence tends to lead changes in retail control by an average of four months. This strongly suggests that we will see a sharp snapback in retail spending in the months immediately ahead," Joseph A. LaVorgna, Chief US Economist at Deutsche Bank wrote in a note on Friday.
Technical analysis
AUD/USD halted attempts to extend its overall downtrend, as a level of intraday support at $0.7750 did not hold.
After a false breakout to the downside, the aussie returned to the previous trading range, with well-highlighted support and resistance zones, but is unable to continue higher faster as sellers still command the market.
Resistance is now seen at $0.7880, where a prior major swing low was located on intraday charts.
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AUD/USD forecast for the week of February 16, 2015
The AUD/USD pair went back and forth during the course of the week, forming a neutral candle for the second week in a row. With that, it appears of the market is or than likely going to continue to try to find a base in this general vicinity. The 0.80 level above should be massively resistive, and as a result it is not until we are well above that cluster that extends to the 0.83 level that we would be buyers. Resistive candles between here and there should be nice selling opportunities though.
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AUD/USD Forecast Feb. 23-27
The Australian dollar posted modest gains last week, as AUD/USD closed at 0.7836. This week’s key event is Private Capital Expenditure. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
The RBA minutes reiterated concern about the health of the Australian economy. In the US, The Fed minutes were dovish in stance, as policymakers raised concerns that a rate hike might hurt the US recovery. Unemployment claims dropped sharply, but manufacturing numbers disappointed.
* All times are GMT.
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The 0.7800 are is still a good support for the Aussie.
Aussie weaker after strong overnight gains, Kiwi up on trade
The Australian dollar eased in early trade in Asia on Thursday ahead of capital spending data after solid overnight gains while the Kiwi gained on a narrower than expected trade gap.
AUD/USD traded at 0.7884, down 0.03%, while NZD/USD changed hands at 0.7570, up 0.21%. USD/JPY changed hands 118.85, flat.
New Zealand reports Janaury trade data of a deficit of NZ$1.41 billion, narrower than the NZ$1.65 billion expected.
Up ahead, Australia reports private new capex data at 1130 (0030 GMT) with a 2.0% quarter-on-quarter fall expected.
In Japan, central bank board member board member
Koji Ishida will speak to business leaders in Yokoham and hold a news conference from 1430 to 1500 (0530 to 0600 GMT).
Overnight, the dollar remained broadly lower against a basket of other major currencies on Wednesday after downbeat U.S. new home sales data and as Tuesday's remarks by Federal Reserve Chair Janet Yellen continued to weigh.
The U.S. dollar weakened 0.70% against its Australian counterpart on Wednesday in the U.S. as concluded her second day of testimony on Capitol Hill.
At one point on Wednesday, AUD/USD reached a one-month high of 0.7900 -- an increase of more than 0.75%. The pair closed on Wednesday in U.S. markets up 0.054 points to 0.7886.
In a report, the U.S. Commerce Department said new home sales fell by 0.2% to 481,000 units last month, compared to expectations for a decline of 1.3% to 475,000. New home sales in December were revised up to 482,000 units from a previously reported 481,000 units.
On Tuesday, Fed Chair Yellen said it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.
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AUD/USD forecast for the week of March 2, 2015
The AUD/USD pair went back and forth during the course of the week, ultimately hanging about the 0.78 level. With that, this is a market that doesn’t look like it’s ready to do much in the way of larger moves. However, we would love to sell a resistive candle closer to the 0.80 handle, as it should be massively difficult to break above to the upside. On the other hand, if we break down below the hammers from a couple of weeks ago, we would in fact start selling as we should go much lower.
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RBA may cut interest rates next week - press
Chatter about a rate cut on March 3
The RBA rate decision on Tuesday (late Monday in the US) is a cliff hangar, according to market probabilities. Australian cash rate futures imply a 47% chance of a cut and a 53% chance rates will be left unchanged.
On Saturday, Sydney Morning Herald editor Michael Pascoe wrote about 'why another interest rate is coming'. He focuses on the latest capex data.
"The neat thing about the capex survey is that it looks forward as well as counting the past. It's the forward bit that isn't as encouraging, showing non-mining investment momentum has been lost, that the confidence isn't there to invest more.
But he doesn't make any kind of forecast about when the cut is coming, just that it could come 'perhaps as soon as Tuesday'
Meanwhile, Westpac chief economist argues that the cut is coming next week.
"Developments since the February rate cut have strengthened the case for a cut in March," he said, citing jobs and capex data.
"The policy approach to ensure maximum easing in financial conditions would be to cut rates by 25bps and adopt an explicit easing bias. That bias might not need to be acted on but such a policy would ensure maximum downward pressure on the AUD."
Nothing yet from Ronald McCrannold on the RBA but in February he said it would be a shock if the RBA cuts again.
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Aussie weaker in early Asia with China HSBC PMI Feb final ahead
The Australian dolalr eased on Monday in early Asia after data at the weekend showed China's official manufacturing index just in contraction.
Later Monday, China is to publish the final February reading of the HSBC manufacturing index, or PMI with 50.1 expected, placing it just in the expansion zone.
At the weekend, the February China Federation of Logistics and Purchasing (CFLP) manufacturing PMI improved for the first time in seven months, despite the Chinese New Year holiday, but remained just below the 50 mark, indicating that the sector contracted for a second straight month. The index rose to 49.9 in February from 49.8 in January.
Australia's AI Group PMI fell 3.6 points to 45.4 in February, data released Monday showed.
Also on Monday, Australia publishes the MI inflation gauge and HIA new home sales for January. In Japan comes the February PMI as well.
AUD/USD traded at 0.7806, down 0.02%, while USD/JPY changed hands at 119.68, up 0.08%.
Last week, the dollar pushed higher against the yen and the euro on Friday after data showed that the U.S. economy expanded modestly in the last quarter of 2014, supporting expectations for interest rate increases.
The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 2.2% in the last three months of 2014, down from an initial estimate of 2.6% but ahead of expectations for a downward revision to 2.1% growth.
Other reports showed that U.S. pending home sales rose to a one-and-a-half year high in January and consumer sentiment also remained strong.
The February reading of the University of Michigan's consumer sentiment index was revised up to 95.4 from the preliminary reading of 93.6. While this was down from the previous months final reading of 98.1, it was still the second highest level since January 2007.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the day almost unchanged at 95.29, not far from Thursday’s one-month highs of 95.43.
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