It was a mixed week for the Aussie Dollar, which didn’t perform quite as poorly as a simple focus on the AUD/USD exchange rate might suggest. The pair opened on Monday around 0.7770 and traded essentially sideways in a relatively tight range until the close of business on Wednesday. On Thursday, it initially sold off to just below 0.7750 on a softer than expected labour market report but a surge in commodity prices then lifted it back on to 78 US cents for the first time in 6-days. By the end of the session in New York, however, it had suffered what technical analysts refer to as a “key day reversal” with a higher high, lower low and lower close than the previous day. Friday confirmed this reversal with a fall all the way to 0.7660. Despite this drop, the AUD ended the week up against the GBP and NZD, though down against the EUR and Canadian Dollar.
With all the focus on the monthly and quarterly macroeconomic data, it’s often easy to overlook numbers which show what actually reflects people’s day-to-day life and experiences, which is why we often look at credit card spending, housing affordability and the detail of inflation reports. Last week, the Australian Bureau of Statistics published its short-term visitor arrivals data. The February data showed that 115,200 visitors came from China with 113,400 arrivals from New Zealand. On a rolling 12-month basis, the total number of Chinese visitors was just under 1.4 million; overtaking Kiwi tourists for the first time ever. Like in many other places, Chinese tourists spend the most of any group in Australia. Ten years ago, Chinese tourists accounted for less than 5% of global travel spending. Today, the figure is almost 25%.
The highlight for financial markets in Australia this week will be the publication of quarterly CPI numbers on Tuesday. The consensus is for an increase of between 0.4 and 0.5% in Q1 which would take the annual rate of inflation to between 1.8 and 1.9%. It is very frustrating for investors who have no monthly CPI numbers to find there are four different quarterly measures produced: headline, core, trimmed mean and weighted mean. The RBA target is for core inflation (excluding volatile items) between 2-3% but the Q1 numbers are likely to show only slow and gradual progress towards this goal, with consensus expectations centering on 1.9%. The Aussie Dollar opens in Asia this morning having closed in New York on Friday at USD0.7665, with AUD/NZD at 1.0640 and GBP/AUD1.8250.