AUD/USD Fundamental Analysis March 29, 2012, Forecast

Analysis and Recommendation: (close of Asian session)

 The AUD/USD weakened 0.3 percent to $1.0426 The Australian and New Zealand dollars slid against most major peers as Asian stocks extended a global retreat, sapping demand for higher-yielding assets.

Both currencies are headed for their first monthly drop this year amid concern Chinese manufacturing will slow, curbing demand for resource exports. Australia’s dollar touched the weakest level in five months against New Zealand’s so-called kiwi before a report forecast to show annual growth in bank lending in the larger nation was the slowest since August.

Chinese economic data showing a fall in profits in the country’s important industrial sector had weighed on the Australian dollar overnight.

Data released by China’s National Bureau of Statistics on Tuesday showed profits in the country’s industrial sector fell 5.2 per cent in the first two months of 2012.

It was the first time since 2009 that the sector has recorded a drop in profits.

The Australian dollar’s fall also reflected the market’s concern a string of weaker Chinese data would weigh on the Reserve Bank of Australia when it decides whether to cut or hold interest rates next month.

Some of the weakness we are seeing in the Aussie today reflects the fact that the RBA is positioning itself for the RBA statement next week.

China, Australia’s largest trading partner, has lowered its economic growth forecasts to 7.5 per cent this year while recent data releases have shown that the country’s manufacturing sector is continuing to contract.

Economic Data March 27, 2012 actual v. forecast

 

 

Economic Events March 29, 2012 that affect the JPY, AUD, and NZD                                                        

00:50     JPY        Retail Sales (YoY)                                           1.4%       1.9%    

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.      

13:30     USD      Initial Jobless Claims                                    350K       348K      

13:30     USD      Continuing Jobless Claims                          3365K     3352K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.             

13:30     USD      GDP Price Index (QoQ)                                 0.9%      0.9%

The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product. It is the broadest inflationary indicator.                             

13:30     USD      GDP (QoQ)                                                        3.0%       3.0%    

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

17:45     USD      Fed Chairman Bernanke Speaks

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.                                                                       

22:45     NZD      Building Consents (MoM)                                           8.3%    

Building Consents (also known as Building Permits) measures the change in the number of new building consents issued by the government. Building consents are a key indicator of demand in the housing market.

Government Bond Auctions (this week)

Mar 29  09:10  Italy   BTP/CCTeu auction

Mar 29  17:00  US  Auctions 7Y Notes