The AUD commenced yesterday’s session looking to make some recovery after consistently losing ground against all the majors for the last few weeks, all expect the NZD. These gains appeared to be short-lived. Weaker than expected AUD Retail Sales for August were announced a few hours into yesterdays trading session. The figure only rose 0.1 per cent, below expectations and lower than the last figure for July which was at 0.4 per cent. On the release of these figures AUD gave back all the small gains it had made overnight. Throughout the rest of the day AUD lost more ground against all currency’s including NZD. AUD/USD was trading as low as 86.66 US Cents; the lowest figure we have seen in nearly 8 months.
The overnight session saw a slightly different result. BK Asset Management managing director Boris Schlossberg explained that “consumer spending continues to expand albeit at a glacial pace and the report marks 15 out of the past 16 months that retail sales have risen in Australia”. Further commenting that he expects the Australian Dollar to bounce again if it gets near to the low of 86.60 US Cents as it will move buyers into the currency.
This opinion is contracted by Commonwealth Bank currency strategist Joseph Capurso who believes that “the AUD sell off may have further to go and will likely find itself in the 85 US Cents range before the end of the week”.
Today the Reserve Bank of Australia will release its Annual Report and we will also see the results for the AUD Trade Balance for August at 11:30 am AEST. July’s result was extremely disappointing at a figure of -1359M.
There is a large volume of Data out from the US in latter part of this week. Last night saw the release of ISM Manufacturing for September, a slightly lower than anticipated figure of 56.6, constructing spending for August at -0.8% and with Consumer Confidence for September, showing a weaker than expected figure at 86.0 indicating that whilst the US is showing some improving results in economic releases the consumers of America are still feeling uneasy about the state of their economy.
Tonight the US will release Jobless Claims and Factory Orders. Both generally of medium significance to the market. On Friday we have high tier data in the form of Non-Farm Payroll and the Unemployment Rate for September. Last month’s unemployment figure for the US was 6.1% and it is not expected to change for September, however, any variations from expectation could cause significant market movements for the USD.
Over in the Euro-Zone we have the European Central Bank Interest Rate Decision out tonight. Last month Mario Draghi shocked the market by lowering the Interest Rate to 0.05%, and Investors will be waiting for his accompanying speech of any indication of further intervention by the Central Bank to influence the EUR.