Australia: Improvement in economic indicators - AmpGFX

Recent economic reports in Australia have tended to beat expectations, more so than most other countries, according to Greg Gibbs, Analyst at Amplifying Global FX Capital. 

Key Quotes

“The Citibank Economic surprise index for Australia is at 52%, above Canada (expected to hike rates this week) at +46%, above New Zealand at +24%, well above the USA at -56% and the UK at -34%.”

“The NAB Business survey due on Tuesday should show a solid outcome after the PMI data for June showed rising trends across all sectors (services, construction, and manufacturing) all significantly above 50.”

“Labour market data has strengthened in recent months, and indications of tightening capacity utilization, strong business surveys, including employment components, and solid growth in job ads suggest that the trend should continue in next week’s labour report.”

“It doesn’t feel like the time to make bold FX calls against the USD, but it may be worth looking for opportunistic strength in the AUD against selected currencies.  AUD/NZD is still near range lows after the AUD fell on the most recent largely unchanged RBA policy statement.  The minutes of that meeting may reveal a little more about the RBA mindset, but it is unlikely to bring fresh reason to sell the AUD.”

“The New Zealand economy is also performing relatively well, but its housing market is showing clearer signs of having slowed in response to macroprudential measures.  There is a national election on 23 September, and there is a significant risk that the National government, seen as a safe pair of hands, loses its ruling majority, and either needs to work with NZ First, or loses power to a Labour Party led coalition.  Dairy prices have been stable recently, whereas, Australian commodity prices have recovered some losses earlier in the year.”