AUD/USD Weekly Forecast – 07 December

Friday, Dec 04 2015

Events that marked the week:

From Australia, on Tuesday, Building Approvals and Current Account data was released. The trend estimate for total dwellings approved fell 0.6% in October and has fallen for seven months. The seasonally adjusted estimate for total dwellings approved rose 3.9% in October and has risen for two months. Analysts were predicting 2.4% decline. The trend estimate for private sector houses approved fell 0.5%, while private sector dwellings excluding houses fell 0.8% in October and has fallen for seven months.

The current account deficit, seasonally adjusted, decreased $2,402m (12%) to $18,104m in the September quarter 2015. Larger decrease to $16,600m was expected. The deficit on the balance of goods and services decreased $3,508m (32%) to $7,438m. The primary income deficit increased $1,106m (12%) to $10,054m.

Also, from China offical and Caixin Manufacturing PMI figures were published. The official purchasing managers index fell to 49.6 in November, the lowest level since August 2012. That compared with a median estimate of 49.8 which was also the level for September and October. The non-manufacturing PMI rose to 53.6 from 53.1 a month earlier. Another manufacturing PMI released by Caixin Media and Markit Economics edged up to 48.6 in November, exceeding the median estimate of 48.3. The gauge has a smaller sample size and includes smaller companies and exporters.

However, the focus of the session was on RBA interest rate decision and the following statement. Australia's central bank kept interest rates steady for a seventh month on Tuesday as data showed exports provided a huge lift to the economy last quarter and helped fill a gaping hole left by business investment.The Reserve Bank of Australia (RBA) did again note that low inflation meant there was room for a cut in the 2 percent cash rate should signs of recovery disappoint in coming months.

Focus of Wednesday's session was on Australian GDP data. Official figures show Australia's economy grew by 0.9% in the September quarter, and by 2.5% in the 12 months to September - a better-than-expected result. Analysts were forecasting 0.9% growth. The key drivers of economic growth in the September quarter were net exports, household consumption and housing construction, more than offsetting the expected fall in business investment as we move through this transition period," he said.

Thursday's session brought Australian Trade Balance data. In trend terms, the balance on goods and services was a deficit of $2,684m in October 2015, a decrease of $106m (4%) on the deficit in September 2015. In seasonally adjusted terms, the balance on goods and services was a deficit of $3,305m in October 2015, an increase of $902m (38%) on the deficit in September 2015. Smaller increase to $2,600m was expected. In seasonally adjusted terms, goods and services credits fell $829m (3%) to $26,594m, while goods and services debits rose $74m to $29,900m.

Focus of the Friday's session was on Australian Retail Sales data. The latest Australian Bureau of Statistics (ABS) Retail Trade figures showed that Australian retail turnover rose 0.5% in October 2015 following a rise of 0.4% in September 2015, seasonally adjusted. Analysts were forecasting 0.4% increase. The trend estimate for Australian retail turnover rose 0.3% in October 2015 following a 0.3% rise in September 2015. The trend estimate rose 3.9% in October 2015 compared to October 2014.

This week markets will be looking at:

ANZ Job Advertisements (Monday 1:30)

NAB Business Confidence (Tuesday 1:30)

Trade Balance (Tuesday)

Home Loans (Wednesday 1:30)

China's CPI/PPI (Wednesday 2:30)

Employment Change/Unemployment Rate (Thursday 14:30)

More in this category: « EUR/USD Weekly Forecast – 30 November - 04 December GBP/USD Weekly Forecast – 07 December – 11 December »