AUD/USD Daily Forecast

Tuesday, Dec 05 2017

Yesterday's session was marked by Australian Retail Sales and Current Account figures. Australian retail turnover rose 0.5 per cent in October 2017, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. This follows a 0.1 per cent rise in September 2017. "In seasonally adjusted terms, there were rises across all industries led by cafes, restaurants and takeaway food services (1.7 per cent)," the Director of the Quarterly Economy Wide Survey, Ben James, said. There were also rises for food retailing (0.3 per cent), clothing, footwear and personal accessory retailing (1.0 per cent), other retailing (0.3 per cent), department stores (0.5 per cent) and household goods retailing (0.1 per cent) in October 2017.

Separate report on Current Account showed that the seasonally adjusted current account deficit fell $539 million to $9,125 million in the September quarter 2017, according to figures released by the Australian Bureau of Statistics today. In seasonally adjusted terms, the balance on goods and services surplus in the September quarter 2017 was $3,056 million. Exports of goods and services fell $154 million and imports of goods and services rose $222 million. The fall in the net primary income of $1,044 million to $11,968m was the main contributor to the narrowing of the current account deficit in the September quarter 2017.

However, the focus of the session was on RBA interest rate decision. The Reserve Bank of Australia held its cash rate at a record low 1.50% on Tuesday as expected. The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time. The Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

In the US session ISM Non-Manufacturing PMI data was published. The November PMI registered 58.2 percent, a decrease of 0.5 percentage point from the October reading of 58.7 percent. Comments from the panel reflect expanding business conditions, with New Orders and Production leading gains, employment expanding at a slower rate, order backlogs stable and expanding, and export orders all continuing to grow in November. Supplier deliveries continued to slow (improving), but at slower rates, and inventories continued to contract during the period. Price increases continued, but at a slower rate. The Customers’ Inventories Index improved but remains at low levels.

Tomorrow's session will bring Australian GDP figures. Analysts predict 0.7% growth. In the US session ADP job data will be published. Increase by 189,000 is anticipated.

Figures to watch:

GDP (Wednesday 1:30)

ADP Non-Farm Employment Change (Wednesday 14:15)

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