AUD/USD Monthly Fundamental Forecast October 2012

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Outlook and Recommendation

The AUD/USD  ended the month at 1.0349. This month, Australia’s enviable sovereign position and interest rate differentials have buoyed investor demand for AUD; however, the outlook is more subdued than it otherwise would be, considering fears over loosening RBA policy and the outlook for the mining sector.

Highest: 1.0624

Lowest: 1.0167

Difference: 0.0457

Average: 1.0400

Change %: 1.36

The Australian dollar continues to be supported by strong economic fundamentals, wide interest rate differentials within other advanced economies, and portfolio investment inflows. Furthermore, the International Monetary Fund assesses Australia’s financial system to be sound, resilient and well-managed, adding another favorable element to the country’s overall outlook. Australia is one of the fastest growing economies among the developed world, with the resources sector continuing to be the key economic motor. Real GDP advanced by 0.6% q/q (and 3.7% y/y) in the second quarter of the year, underpinned by temporarily elevated household spending that reflected one-off cash injections from the government. The nation’s public finances are healthy, with public debt at a modest level and the administration aiming to reach a budget surplus in the current fiscal year (July-June). With inflation comfortably within the Reserve Bank of Australia’s target range of 2-3% and the benchmark interest rate being the highest among major advanced economies, monetary policy space adds another tool to the Australian authorities’ kit for dealing with any potential external shocks (i.e. a major slowdown in China and/or a significant drop in commodity prices) to which the economy is vulnerable, given its large current account imbalances and high household debt. We anticipate a modest reduction in the benchmark interest rate towards the end of the year from the current level of 3.5%

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank Name: Reserve Bank of Australia

Date of next meeting or last meeting:  10/02/2012

Current Rate: 3.500%

Economic events for the month of October affecting AUD, JPY, NZD and USD

Date

Time

Currency

Event 

Forecast

Previous

Oct 1

 14:00

USD

ISM Manufacturing PMI

50.0

49.6

Oct 2

4:30

AUD

Cash Rate

3.50%

3.50%

 

4:30

AUD

RBA Rate Statement

  

Oct 3

1:30

AUD

Trade Balance

-0.62B

-0.56B

 

12:15

USD

ADP Non-Farm Employment Change

148K

201K

 

14:00

USD

ISM Non-Manufacturing PMI

53.4

53.7

Oct 4

1:30

AUD

Building Approvals m/m

4.8%

-17.3%

 

1:30

AUD

Retail Sales m/m

0.5%

-0.8%

 

12:30

USD

Unemployment Claims

371K

359K

 

18:00

USD

FOMC Meeting Minutes

  

Oct 5

12:30

USD

Non-Farm Employment Change

111K

96K

 

12:30

USD

Unemployment Rate

8.2%

8.1%

Oct 8

21:00

NZD

NZIER Business Confidence

 

-4

 

23:50

JPY

Current Account

 

0.34T

Oct 11

0:30

AUD

Employment Change

 

-8.8K

 

0:30

AUD

Unemployment Rate

 

5.1%

 

12:30

USD

Trade Balance

 

-42.0B

Oct 12

12:30

USD

PPI m/m

 

1.7%

 

13:55

USD

Prelim UoM Consumer Sentiment

  

Oct 15

12:30

USD

Core Retail Sales m/m

 

0.8%

 

12:30

USD

Retail Sales m/m

 

0.9%

 

21:45

NZD

CPI q/q

  

Oct 16

0:30

AUD

Monetary Policy Meeting Minutes

  
 

12:30

USD

Core CPI m/m

  

Oct 18

14:00

USD

Philly Fed Manufacturing Index

  

Oct 19

14:00

USD

Existing Home Sales

  

Oct 24

0:30

AUD

CPI q/q

  
 

14:00

USD

New Home Sales

  
 

18:15

USD

FOMC Statement

  
 

20:00

NZD

Official Cash Rate

  
 

20:00

NZD

RBNZ Rate Statement

  

Oct 25

12:30

USD

Core Durable Goods Orders m/m

  
 

14:00

USD

Pending Home Sales m/m

  

Oct 26

12:30

USD

Advance GDP q/q

 

1.3%

Oct 30

14:00

USD

CB Consumer Confidence

  

Oct 31

0:00

NZD

NBNZ Business Confidence

  
 

0:30

AUD

Building Approvals m/m

  

 

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