AUD/USD Fundamental Analysis October 4, 2012 Forecast

Posted October 03, 2012 6:24 (GMT) | By FX Empire Analyst - Barry Norman | Print | Font Size
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Analysis and Recommendation:

The AUD/USD continues its tumble in today’s session as Glenn Stevens and the RBA surprised markets by reducing the key lending rate by 25bps yesterday. Markets were expecting the RBA to hold but they did as they usually do, surprise. Also today, there was a slew of disappointing eco data released in OZ showing a widening trade balance, along with a continued decline in new home sales and a lower Services Index.

This combined with a drop in Chinese Non manufacturing PMI weighed heavily on the Aussie.

The US dollar was also strengthened on positive auto data and over market sentiment.

The RBA’s statement suggested that the decision was based on several factors:1) the outlook for growth in the world economy has softened; 2) growth in China has slowed and uncertainty is high; 3) commodity prices are lower; 4) the Australian terms of trade has declined and is likely to decline further; 5) the peak in resource investment is to occur next year and at a lower level than previously expected and 6) a higher than expected AUD. Accordingly monetary policy should be a “little” more accommodative. The statement does not shift the stance to decidedly dovish, leaving open the question as to whether the RBA will cut rates again at either its November 6th or December 4th meetings.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Economic Data October 3, 2012 actual v. forecast

Date	Currency	Event	Actual	Previous
Oct. 03	GBP	BRC Shop Price Index (YoY)	1.00%	1.10%
	AUD	AIG Services Index	41.9	42.4
	AUD	HIA New Home Sales (MoM)	-5.3%	-5.6%
	CNY	Chinese Non-Manufacturing PMI	53.70	56.30
	AUD	Trade Balance	-2.03B	-1.53B

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Date	Time	Currency	Event	Forecast	Previous
Oct. 04	02:30	AUD	Building Approvals (MoM)	4.7%	-17.3%
	02:30	AUD	Retail Sales (MoM)	0.4%	-0.8%
	13:30	USD	Initial Jobless Claims	370K	359K
	13:30	USD	Continuing Jobless Claims	3271K	3271K
Oct. 05	13:30	USD	Average Hourly Earnings (MoM)	0.2%	0.0%
	13:30	USD	Nonfarm Payrolls	110K	96K
	13:30	USD	Average Weekly Hours	34.4	34.4
	13:30	USD	Private Nonfarm Payrolls	125K	103K

Government Bond Auction

Date Time Country

Oct 04 08:30 Spain

Oct 04 08:50 France

Oct 04 15:00 US

Oct 05 15:30 Italy

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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