It has been a fairly quiet start to the week for the Aussie Dollar, stuck between better than expected incoming economic data and recovering stock markets on the one hand, and some nervousness around the RBA’s messaging and Q4 GDP figures on the other. AUD/USD has spent almost the whole of the past 24 hours in a relatively narrow band from 0.7725 to 0.7765, with both the VIX index of volatility and the gold price down a little from Friday’s closing levels.
In economic data, building approvals jumped 17.1% m/m in January, returning to growth following a revised 20.6% fall in December, according to the Australian Bureau of Statistics. That was above the 5% growth forecast in a Reuters poll of economists. Approvals for apartments, classed as private sector dwellings excluding houses, jumped 42.2% in January while approvals for private sector houses fell 1.1%. Meantime, CBA published their service sector PMI survey which rose to 54.2 in February from 53.8 in January, indicating a solid and accelerated rate of output growth. CBI noted that, “New order growth accelerated to a seven-month high, with the favourable demand environment encouraging firms to pass on higher cost burdens to their clients through greater output prices. Meanwhile, the rate of job creation remained weak relative to the series trend amid reports of increased labour costs.”
Even before today’s RBA Board meeting, there is plenty of data scheduled for release. First up at 9.30am is the weekly consumer confidence index, then a couple of hours later there’s the January retail sales report. As with other countries, a shifting pattern of consumption around Black Friday sales promotions in late November has tended to distort retail sales numbers but by the end of January, the y/y rate should see most of these distortions unwound. ANZ forecast a slight acceleration in the annual rate to 2.6%. Also at 11.30am, we get to see the December quarter current account and net export numbers; both of which will feed into Wednesday’s Q4 GDP number. Provisional
estimates suggest around 0.6-0.7% q/q for an annual rate of growth around 2.6-2.7% but these are subject to revision after the last ’partial’ data. The AUD opens in Asia at USD0.7765, with AUD/NZD at 1.0740 and GBP/AUD1.7820.