AUD/USD Weekly Forecast – 05 December

Sunday, Dec 04 2016

Events that marked the week:

Wednesday's session brought Building Approvals figures from Australia. Approvals for apartments suffered the most severe hit, falling 24.8 per cent in October in seasonally adjusted terms to be down almost 43 per cent over the year. Total approvals fell 12.6 per cent, the third successive monthly decline, well down on the market forecast for a 2 per cent increase. The September result was also revised down to a 9.3 per cent fall from the originally reported 8.7 per cent decline.

Thursday's session was marked by Private Capital Expenditure figures and China's PMI report.The trend volume estimate for total new capital expenditure fell by 4.9% in the September quarter 2016 while the seasonally adjusted estimate fell by 4.0%. The trend volume estimate for buildings and structures fell by 8.5% in the September quarter 2016 while the seasonally adjusted estimate fell by 5.7%. The trend volume estimate for equipment, plant and machinery rose by 1.0% in the September quarter 2016 while the seasonally adjusted estimate fell by 1.9%.

Separate report showed that China’s economy expanded at a faster rate in November, with manufacturing activity reaching multi-year highs and services growth showing no signs of relenting. Beijing’s official manufacturing purchasing managers’ index (PMI) rose to 51.7 in November, following a reading of 51.2 the previous month. The November reading was the highest since mid-2014.The official manufacturing PMI captures business trends at large and state-owned companies, contrasting with another closely followed report from Caixin that looks at small- and medium-sized enterprises (SMEs).

Focus of Friday's session was on Australia Retail Sales figures. Australian retail turnover rose 0.5 per cent in October 2016, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. This follows a 0.6 per cent rise in September 2016. In seasonally adjusted terms, there were rises in food retailing (0.6 per cent), household goods retailing (0.7 per cent), other retailing (0.8 per cent) and cafes, restaurants and takeaway food services (0.4 per cent). There were falls in clothing, footwear and personal accessory retailing (-0.4 per cent) and department stores (-0.4 per cent) in October 2016.

This week markets will be looking at:

Cash Rate/RBA Rate Statement (Tuesday 4:30)

GDP (Wednesday 1:30)

Trade Balance (Thursday 1:30)

China's Trade Balance (Thursday)

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

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