AUD/USD Fundamental Analysis – October 20, 2015 – Forecast

Analysis and Recommendation:

The AUD/USD added 6 points on the weakness in the US dollar, while Chinese data was mixed with GDP printing a bit higher than expected but below the 7% annual projections, but industrial production came in lower than expected. Deloitte Access Economics says government spending is at levels usually only seen during recessions, which will only increase as disability insurance costs mature. “The personnel have changed but the problems haven’t,” Mr Richardson says in his latest business outlook released on Monday. They say someone has to not only sort out the unlegislated measures stuck in the Senate and the funding between the Commonwealth and states, but also introduce genuine growth-enhancing tax reform.

However, there are also two positives for Australia from interest and exchange rates. The fall in the Australian dollar has already thrown support to the economy, and there’s more to come as it takes two years for a lower currency to have its maximum positive impact. Interest rates, too, will keep generating good news with their “lower for longer” profile.

Asian stocks pared losses with Australia’s dollar as China reported third-quarter economic growth that beat estimates.

The Shanghai Composite Index swung to a gain as the better-than-estimated 6.9 percent expansion in gross domestic product, while still being slowest pace since the global financial crisis, signaled the government’s stimulus policies may be taking hold.

Industrial production, which measures output at factories, workshops and mines, rose 5.7 per cent year-on-year in September, the NBS said, a sharp drop on the 6.1 per cent increase recorded in August.

Retail sales, a key indicator of consumer spending, increased 10.9 per cent in September, marginally ahead of expansion the previous month.

Fixed asset investment, a measure of government spending on infrastructure, expanded 10.3 per cent on-year in the January-September period.

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.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Tuesday, October 20, 2015

Government Bond Auctions

Date Time Country

Oct 19 10:00 Belgium Auctions OLOs

Oct 20 09:30 UK 2% 2025 Gilt auction

Oct 21 09:30 Germany Eur 4bn 0% Sep 2017 Schatz

Oct 21 14:30 Sweden Announces details of Bond on 28 Oct

Oct 22 09:03 Sweden Holds I/L bond auction

Oct 22 15:30 Italy Announces details of CTZ/BTPei on 27 Oct

Oct 22 17:00 US Holds 30-year TIPS auction