AUD/USD Weekly Forecast – 18 September

Friday, Sep 15 2017

Events that marked the week:

There were no data releases from Australia on Monday, but over the weekend China's CPI and PPI figures were published. China's consumer inflation rose to a seven-month high, as falls in food prices softened, dragging less on the overall index, official data showed Saturday. China's consumer-price index increased 1.8% in August from a year earlier, compared with a 1.4% gain in July, the National Bureau of Statistics said. Food prices edged down 0.2% on year, after dropping 1.1% in July. Nonfood prices grew 2.3% on year, compared with 2.0% on-year growth in July.

The key inflation reading outpaced a 1.6% gain forecast by economists polled by The Wall Street Journal. Policy makers in Beijing hope to keep inflation under about 3% this year. On a month-over-month basis, the CPI rose 0.4% in August from a month earlier. In July, the index edged up 0.1% from the previous month. The producer-price index climbed 6.3% in August compared with a 5.5% on-year increase in July. The reading for factory-gate prices came in faster than a median forecast for a 5.7% increase by the economists.

From Australia, on Tuesday, NAB Business Confidence figures were released. The latest monthly business survey by NAB shows that Australian business conditions are holding up well at recent record highs.That’s the good news, because data for August revealed a sharp fall in business confidence, following consistent gains in that sub-index over recent months. Despite that, overall business conditions ticked higher to +15 from a reading of +14 in July, to currently sit well above their long-term average and at the highest level since early 2008.

Wednesday brought PPI data. The Producer Price Index for final demand advanced 0.2 percent in August, seasonally adjusted. The index for final demand less foods, energy, and trade services increased 0.2 percent in August following no change in July. For the 12 months ended in August, prices for final demand less foods, energy, and trade services rose 1.9 percent.

Thursday's session was marked by Australian job figures, while from China Industrial Production data was released. employment report from its home country which shredded market expectations. The economy added 54,200 jobs in August, it showed. Forecasters had been looking for a 20,000 rise to follow July’s 27,900, but even the most optimistic calls fell far short of the mark. Full-time employment soared by 40,000 with part-time jobs up by 14,100. The unemployment rate remained steady at 5.6%.

The pace of China’s economic expansion unexpectedly cooled further last month after a lackluster July, as factory output, investment and retail sales all slowed. Industrial output rose 6.0 percent from a year earlier in August, versus a median projection of 6.6 percent and July’s 6.4 percent. That’s the slowest pace this year.

This week markets will be looking at:

Monetary Policy Meeting Minutes (Tuesday 3:30)

HPI (Tuesday 3:30)

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