The Aussie was a big winner on the week, moving higher on positive global risk sentiment after more covid vaccine news, positive business sentiment data from Australia, and optimistic commentary from RBA officials.
Australia Headlines and Economic data
Monday:
Australia Flash Composite PMI: Private sector growth accelerates in November, led by services
- Flash Australia Composite Output Index
Nov: 54.7, 4-month high (Oct final: 53.5) - Flash Australia Services Business Activity Index
Nov: 54.9, 4-month high (Oct final: 53.7)
We saw a broad dip in the Aussie during the U.S. session with no apparent direct catalyst, but it did correlate with the U.S. dollar’s big bounce after U.S. Flash PMI data gave the markets a big positive surprise (U.S. flash services PMI up from 56.9 to 57.7 vs. 55.8 forecast).
Tuesday:
RBA Deputy Gov Debelle speech: Does not expect rate hike for next three years
Debelle: AUD has come down by a noticeable amount
Debelle Says RBA Easing Expectations Helped to Lower Aussie – “In anticipation of us going down this path, we’ve seen the exchange rate come down by a noticeable amount, and enough to have an impact on the economy and have an impact on employment and on people’s livelihoods.”
Australia Weekly Consumer Confidence: 104.5 vs. 106.6 previous
Australia Flash trade data: For October there is a goods trade surplus of $4,840m – ABS
Wednesday:
Australia construction work falls 2.6% in Q3 – “That missed expectations for a fall of 2.0 percent following the 0.7 percent decline in the previous three months.”
Thursday:
Australian private capital expenditure sank 3% in Q3 vs. projected 1.5% drop
- Total new capital expenditure fell by -3.0% in the September quarter 2020.
- Buildings and structures fell by -3.7% in the September quarter 2020.
- Equipment, plant and machinery fell by -2.2% in the September quarter 2020.
- Estimate 4 for 2020-21 is $104,984m. This is 6.3% higher than Estimate 3 for 2020-21.
Friday:
China targets Australian wine in latest trade retaliation – “China is set to impose anti-dumping duties of more than 100% on Australian wine from this weekend, adding to a series of sweeping trade reprisals this year and further escalating tensions with Canberra.”
The Australian dollar began to recover from Thursday’s losses during the Asia session. It doesn’t seem to correlate with news from Australia, but the turn did come around news from China that industrial profits grew at the quickest monthly pace since early 2017. This may have sparked some broad risk-on sentiment in financial markets during the session.
