Having closed last week buying .7257, the Australian dollar has flatlined in early Monday trade. Markets are waiting the release of Chinese Q3 GDP along with industrial production, retail sales and urban fixed asset investment figures for September later in the session.
As of 8.30am AEDT the AUDUSD currently buys .7257, nearly one percent lower than where it opened Friday morning last night.
Ray Attrill, global co-head of FX strategy at the NAB, outlines the reasons behind the renewed bout of weakness.
“AUD was the biggest loser, -0.89% to 0.7264 so slightly extending local session weakness and which came in part on comments from the RBA in the Financial Stability review suggesting signs of moderation in Sydney and Melbourne property price inflation and risk of price falls from impending oversupply in the apartment sectors,” he wrote in his Monday morning note.
Continued speculation that the RBA may cut interest rates, perhaps as soon as its November policy meeting, also contributed to the fall following Westpac’s decision to raise variable mortgage rates for its customers by 20 basis points last week.
Looking ahead to Monday’s trading session, Attrill believes market attention will be centered on one thing – the enormous China data dump scheduled for 1pm AEDT.
“Monday’s China GDP and September monthly activity data looms large,” wrote Attrill.
“Market consensus on GDP is 6.8% y/y and it would be very surprising if it didn’t print at 6.8% with more risk of 6.9% than sub-6.8%, based on patterns of the past few years. That said, over the weekend Chinese premier Li was quoted saying achieving growth of 7% this is ‘no easy’, according to Reuters, which could be a hint at a mild downside surprise today.”
Three of the past four GDP figures released by the Chinese government have beaten market expectations by 0.1%. The outlier was Q1 GDP for 2015 which matched expectations.
Attrill suggests that industrial production, retail sales and urban fixed asset investment figures for September, released alongside the GDP report, may actually be more influential on markets that the economic growth figure.
In annual terms, industrial production is expected to grow by 6.0%, down from 6.1% in August, while retail sales are tipped to remain steady at 10.8%. Urban fixed asset investment is forecast to grow 10.8%, below the 10.9% level seen previously.
Here’s the full Aussie dollar scoreboard.
- AUD/USD 0.7257 , 0 , 0.00%
- AUD/JPY 86.61 , -0.04 , -0.05%
- AUD/CNY 4.6099 , 0.0013 , 0.03%
- AUD/EUR 0.6387 , -0.0005 , -0.08%
- AUD/GBP 0.4697 , -0.0002 , -0.04%
- AUD/NZD 1.0656 , 0.0012 , 0.11%