Australian & New Zealand Session Wrap

[Navigation FX]

Hi guys,

Will be posting all Australian and New Zealand session wraps.

Hope you enjoy reading, we like to interact. Ask us questions, we are a big team of analysts. Happy to respond and talk to everyone

Thanks for your read

 

[Navigation FX]

Australia & New Zealand Session Wrap - 23/11/16

Australian Markets

• Construction Work Done (QoQ) Q3 – -4.9% vs. -1.7% exp. Previous -3.1%

Not good numbers, a complete miss on the completion of Australian construction work. With these numbers being the biggest drop since Q3 year 2000. Some tables from the Australian bureau of Statistics;

The result of the poor construction will weigh poorly on Q3’s GDP figures. ANZ said this could cut 0.7% from GDP. With Westpack estimating at least 0.5% and UBS at 0.7%.

• Moody’s says that the Australian corporate outlook for 2017 is stable. Some key points;
  • The outlook for corporate sectors within Australia looks stable
  • Corporate companies show solid balance sheets and liquidity
  • Financial leverage is moderate as is refinancing needs
  • Within the mining sector, pressure remains. Companies in the sector are improving from previously weak levels
  • Moody’s core outlook is for a gradual increase in earnings growth
  • Moody’s forecast for GDP growth ranges between 2.0% – 3.0%

• RBA’s Assistant Governor Chris Kent had a speech last night. He spoke in front of an Australian Business economists conference dinner. His speech was named “Australia’s Economic Transition – State by State”. Main points;
  • Australia’s GDP growth will be close to it’s targeted rate over the next few years
  • Unemployment rate likely to decline
  • Spare capacity in the labour market could remain an issue for some time
  • RBA expects inflation rate to stay low in the short term. With levels to go back to normal once there is a gradual rise in wages
  • RBA have revised its trade forecasts due to the recent rise in Commodity prices

• Briefly mention Australian mining wages cuts. An article by Reuters that a mining company by Lanco’s Griffin suggest that there will be pay cut will be 43% to workers. The reason for the pay cuts, comes five years after the peak of a commodity price boom. The switch will mean wages fall to statutory minimum pay, with this case being the first among the industry. Companies such as U.S. giant Exxon Mobil Corp and China’s Yanzhou Coal Mining are likely to follow these controversial changes. If these changes are to go through, there will be impact on consumer spending since income falls. Thus meaning, monetary policy decisions will be affected.

New Zealand

Still quiet here. We were expecting to see PPI data, however Statistics New Zealand have continued with the delayed the numbers whist they deal with the aftermath of the earthquake. We will be keeping an eye on the calendar, for more here

 

[Navigation FX]

Australia & New Zealand Session Wrap – Quiet Day

Australian Markets

• Australian PM, Malcolm Turnbull has said that government is to invest $80B in infrastructure.

• Delayed data from Building Capital Expenditure (MoM) Q3, Plant/Machinery Capital Expenditure (QoQ) Q3 and Private New Capital Expenditure (QoQ) Q3.

AUD/USD has been slightly volatile on trading hours. Very nice support formed at 0.7643 (61.8 fibo). You can be certain if this breaks, sellers will be going short to a new support of 0.7343 (0.786 fibo) making just over 20 pips.

New Zealand Markets
Still quiet from NZ statistics, waiting for a release on some data. Still working towards the aftermath of the earthquake.

AUD/NZD support kept the NZ dollar weaker.

 

[Navigation FX]

Australia & New Zealand Session Wrap

Australian Markets
There has been nothing in the financial calendar today for Australian news. However, there have been more developments with Australia’s GDP. If you remember in our previous session wrap we had talked that the big banks are expecting Australia’s GDP to decrease. Morgan Stanley’s David Blake has released a statement;

• Australia’s GDP is currently ‘overstated’
• “We have been arguing that Australia’s real GDP of 3.3 per cent year-on-year feels overstated, with the sharp decline in commodity prices driving an income recession over 2014-15,” Mr Blake said in a note to clients
• “Heading into the 3Q GDP figures on December 7, our tracking estimate of -0.3 per cent would not only mark just the fourth decline in the last 100 quarters, but also bring year-on-year GDP growth back to around 2 per cent”
• “The improved outlook for commodity prices is not likely to lead to a noticeable pick-up in mining investment”
• “We have been out of consensus with the view that the housing cycle’s growth contribution has peaked”
• “While pure dwelling investment may rise a little further over the next two-three quarters, we see a hard landing for the apartment cycle weighing on activity in the second half of next year and into 2018”
• “Meanwhile, the consumer has been stretched by weak income growth and rising indebtedness, with wage inflation marking a new record low of 1.9 per cent, and retail volumes falling 0.1 per cent in 3Q 16”
• With a negative GDP number would mean that the holds on interest rates will go, with more potential cuts from the RBA
• With the expected increase in the US dollar as well as the expected FED hike next month. The Australian dollar may likely find itself under pressure

Whilst AUD/USD has been following the triangle as posted in our technical analysis. We have posted the latest here

New Zealand Markets

• Exports (Oct) – +3.90B vs. +3.75B exp. Previous +3.46B
• Imports (Oct) – +4.74B vs. +3.76B exp. Previous +4.86B
• Trade Balance (YoY) Oct – -3,300M. Previous -3,360M
• Trade Balance (MoM) Oct – -846M vs. -950M exp. Previous -1,394M

The first day that Statistics have started to come out for New Zealand following last weeks earthquake. For Statistics New Zealand calendar click here, however we are still waiting to hear on the next release dates.

Trade balance is very welcoming news and a big improvement on September. Exports also increased +2.2% y/y.

This data was not much of a market mover and hardly any response from the NZD as expected.

NZD/USD on a slight up gain at 0.7040.

 

[Navigation FX]

Today’s Australia and New Zealand Session Wrap – 30/11/16

Australian Markets

• AUD – Building Approvals (MoM) Oct – -12.6% vs. 1.5% exp. Previous -9.3%
• Housing Credit Oct – +0.6%. Previous +0.5%
• Private House Approvals Oct – -3.4%. Previous +1.5%
• Private Sector Credit (MoM) Oct – +0.5% vs. +0.4% exp. Previous +0.4%

Really not good data from the building approvals, a huge miss in-fact. The year-on-year was -24.9% vs. -6.2% exp. Previous -6.4%.

With housing construction being a spot light for the Australian economy, the mining infrastructure does not look good either. There is still housing construction work to come, but there are serious declines.

With that said: Senior Director of Sovereign Ratings at S&P, Kim Eng Tan, said that higher commodity prices are unlikely to be of significant help in improving Australia’s long-term fiscal position. Political uncertainty following the 2016 Outlook is said to be contributing to the negative Outlook. With that in mind the AAA credit rating will be remaining under question.

Meanwhile Australian Treasurer Morrison is currently ‘reviewing’ tax to raise more revenue. Not sure how happy people will be…. He is really trying to raise more tax revenue in order to stabilise government receipts. Upon speaking to the media this morning, he stated that the following are to be reviewed;

1. petroleum resource rent tax
2. review triggered on falling revenues
3. review to ensure resource companies pay a ‘fair share’ of tax

New Zealand Markets

• ANZ Business Confidence – +20.5. Previous +24.5
• NBNZ Own Activity Nov – +37.6%. Previous +38.4%

Business confidence does is down by 3 points, however historically strong. The survey ANZ conducts also looks at inflation expectations. The 12 month outlook stands at 1.49 percent from 1.49 percent in the previous survey.

• RBNZ Governor Wheeler Speaks in front of parliamentary committee – Summary

The main point from here is that Wheeler expects December CPI to be back in the target band, just over 1%. Adds that economy is not in need of substantial fiscal stimulus. Wheeler has another meeting scheduled with the finance minister in a “couple of weeks” to discuss debt-to-income ratios for home lending. Where they will need to consider introducing debt-to-income (DTI) restriction on home lending.

Also RBNZ Deputy Governor Grant Spenser had some say. He is to consider a “speed limit” restriction on DTI lending. He adds that GDP outlook shows little change by the earthquake with the total cost ranging from 3B – 8B NZ dollars.

 

[Navigation FX]

Today’s Australia and New Zealand Session Wrap – 30/11/16

Australian Markets

• Building Capital Expenditure (MoM) Q3 – -5.7%. Previous +-11.3%
• Plant/Machinery Capital Expenditure (QoQ) Q3 – -5.7%. Previous +4.2%
• Private New Capital Expenditure (QoQ) Q3 – -4.0% vs. -2.5% exp. Previous -5.2%
• Commodity Prices (YoY) – +32.1%. Previous +15.3%

Australia’s net capital expenditure has been on a sharp decline. Even expecting more for next year.

• Australian Financial Review: S&P reports that;
  • S&P will look past the rally in commodity prices when it evaluates Australia’s fiscal health
  • S&P is not convinced that commodity prices will continue stay at current levels, as it is largely driven by a higher demand from China
  • S&P is concerned that the government is pushing out the timing on its goal to achieve a surplus further
  • “In terms of the government’s medium-term fiscal outlook, we are not quite sure that the recent rebound in prices are likely to be of a very big help in helping the government to reach a balanced budget that it promises by 2021”
  • 2021 target has actually been pushed quite a few times over the course of the past few years”

We posted a technical graph yesterday, and the correction did occur as we predicted shown below in H4 for clarity. AUDUSD trading at 0.73951.

New Zealand Markets

• Terms of Trade Export Prices Q3 – -2.8%. Previous -1.9%
• Terms of Trade Imports Prices Q3 – -1.0%. Previous +0.2%
• Terms of Trade Imports Prices Q3 – -1.8%. Previous -2.1%
• AIG Manufacturing Index – +54.2. Previous +50.9

Exports prices fell for dairy, meat and forestry goods. In total goods export prices fell 2.8 percent, whilst goods export volumes and values fell too. Good imports prices fell 1.0 percent and terms of trade have also fallen in four of the five quarters.

Statistics have been coming out from NZ statistics since the earthquake, with the calendar here

NZDUSD has been trading at 0.7800, declined 34 pips since the previous day.

 

[Navigation FX]

Australia & New Zealand Session Wrap – 2nd December 2016

Australian Markets

• Retail Sales (MoM) Oct – +0.5% vs. +0.3% exp. Previous +0.6%

Australian retail sales up +0.5% a nice beat on expectations by +0.2 percent. August, September and October retail sales data have been a much bigger improvement. Furthermore, in trend terms, Australian turnover rose 3.3% in October 2016 compared with October 2015 (i.e. y/y). The Australian dollar showed a slight positive response from the data, just a few pips up.

• Reuters Poll: Reserve Bank of Australia (RBA) is expected to hold on rates at the December meeting on Tuesday 7th December at 2:30pm Sydney (03:30 GMT).
  • RBA who is Australia’s central bank is pretty certain to keep its cash rate at a record low of 1.5 percent during its monthly meeting next week
  • Poll composed of 64 economists, with 64/64 expecting rates to hold, following cuts in May and August
  • 17 respondents expect at least one more easing by mid 2017 against 29 polled earlier last month

• Q3 GDP Data is set on Wednesday 7th December at 00:30 GMT

New Zealand
Statistics New Zealand have delayed further data again. This includes Q3 GDP, which is now set to release on the 22nd December (originally 15th December). We were also expecting Building Consents (MoM) Oct and Visitor Arrivals.

NZDUSD standing hold of 0.7087, there was a good up-gain of around 40 pips from the previous day.

 

[Navigation FX]

Australia & New Zealand Session Wrap – 5th December 2016

Australian Markets

• AIG Services Index - +51.1. Previous +50.5
• MI Inflation Gauge (MoM) - +0.1%. Previous +0.2%
• ANZ Internet Job Ads (MoM) Nov - +1.7%. Previous +1.0%
• Business Inventories (MoM) Q3 - +0.8% vs. +0.2% exp. Previous +0.2%
• Company Gross Operating Profits (QoQ) Q3 - +1.0% vs. +3.0% exp. Previous +6.5%
• Company Profits Pre-Tax (QoQ) Q3 - +3.6%. Previous +12.8%

Australian services index shows a positive response with a +0.6 point gain. The key findings show that there was a gradual lift into growth following a sluggish period. It's important to note that results above 50 indicate an expansion and results under 50 indicate contraction. New orders increased by 1.7 points to 54.0, employment expanded at a slower pace (falling 0.6 points to 52.3), deliveries increased into a positive territory, rising 3.6 points to 51.8 in November. Some respondents to the Australian PSI had notes that the US federal election had dampened business confidence in November.

• With regards to Business Inventories Westpac had a statement on this one;
  • Inventory levels increased by a relatively solid 0.8% ... will see inventories add 0.2 points to Q3 GDP growth
  • We suspect that some of this inventory run-up, which was centred on wholesale and to a lesser extent retail, was unintentional. This was against the backdrop of patchy demand.
  • Profits across the broader economy were mixed ... adding to the evidence that conditions were soggy around mid-year
  • Wages and salaries increased by a moderate 1.2% in the quarter but grew by only 2.9% over the year. Hours worked rebounded in the quarter, reversing the Q2 dip, supportive of wage incomes
  • Small business profits surprised to the downside
  • Our forecast for Q3 GDP remains 0.2% this quarter, 2.4% over the year. We interpret today's results as reducing some of the downside risks surrounding our central case forecast.
  • This in summary shows that it will boost Q3's GDP. However, Westpac says the increase in inventory is "unintentional. This was against the backdrop of patchy demand". Although wages were significantly better which should provide some support for private consumption.
  • MI inflation range is up +0.1% m/m, prior +0.2% whilst y/y up +1.5%, prior +1.5%. These numbers are not the official inflation data from Australia, it can prove useful for an indicator for inflation. To note that RBA target 2-3% inflation over the medium term.
• Australian ANZ Job Ads strong for the second month of solid gains. It is up +6.1% y/y. Previous +5.2%.
  • Head of Australian Economics, Felicity Emmett at ANZ comments
    • "The rise in ANZ job ads over the past four months is quite encouraging given the recent softness in the employment data"
    • "Consistent with our view that although the pace of improvement in the labour market has slowed, conditions remain supportive of ongoing recovery"

Meanwhile, The RBA will meet tomorrow for their December monetary policy decision, the expectation is for a 'no change' decision.

New Zealand Markets

• ANZ Commodity Price Index (MoM) - +2.7%. Previous +0.7%
  • Dairy rose +4.8% m/m in November making it the sixth increase
  • Tight global milk supplies and Chinese import demand continued this month
  • Prices for Aluminium increased +4.2% m/m, an increase of 18% from last year
  • Metals increased in prices since Trump vowing to invest into construction into America, increasing demand. With less demand from China, this has been good.
• Main headline really is that NZ Prime Minister John Key will resign in 2017
  • Due to family circumstances, he is to resign. Claiming it's 'a good time to go'
  • His party win will next year under Bill English

NZDUSD has been ranging for a few days now, currently trading at 0.7100

 

[Navigation FX]

Australia Session Wrap – 9th December 2016

Housing

• Home Loans (MoM) Oct: -0.8% vs. -1.0% exp. Previous 1.5%
• Invest Housing Finance (MoM) Oct: 0.7%. Previous 4.6%

There is a debate within Australia as to if housing is actually affordable, especially for the first time buyer. However, fortunately we do not get too involved with this here at Navigation FX

AUDUSD has had a 25 pip gain and is still increasing trading at 0.7470

New Zealand Session Wrap – 9th December 2016

Card Spending

• Electronic Card Retail Sales (MoM) Nov: -0.1%. Previous 0.5%
• Electronic Card Retail Sales (YoY) Nov: 5.1%. Previous 4.2%

New Zealand retail spending on electronic cards fell in November, whilst there were two consecutive months of positive gain with disruption from the Kaikoura earthquake.

Retail spending dropped a seasonally adjusted 0.3 percent in November after a 0.6 percent increase in October, 2.1 percent in September.

Statistics NZ’s business indicators senior manager Neil Kelly said, “We are not sure how sales may have been affected by the 14 November, 7.8 magnitude earthquake in the upper South Island, which also caused ongoing disruption in central Wellington”

 

[Navigation FX]

AUSTRALIA SESSION WRAP – 19TH DECEMBER 2016


STABLE OUTLOOK
Moody’s says that Australia shows a stable outlook with it’s budget update is in line with the AAA ratings.

Bloomberg’s analysts had some some opposte points on the matter

• Potential housing risks may show vulnerability for Australia
• Continuation of Australian commitment to fiscal consolodation
• Australia meeting targets difficult with weaker nominal GDP
• Australian budget deficits for longer than projected

DEFICIT
The Australian Mid-year Economic and Fiscal outlook (MYFEO) sees a deficit for 2016/17 at A$36.5Bn dollars with an underlying cash deficit of A$37.1Bn was forecasted in the May budget.

• 2017/18 budget is projected at A$28.7B (previously forecasted at $26.1B in May budget)
• 2% GDP growth expected in 2016/17 (previously forecasted at 2.5% in May budet)
• Australia sees the budget returning to a surplus in 2020/21
• Net debt possibly to peak at 19% pf GDP in 2018/19

If you want to see the full report, click here

Meanwhile: AUD made some improvement on a small gain on the MYEFO announcement. However, we don’t particularly see this as the best news even though the key point to take from this is that the budget deficit this year is projected to be smaller than was foretasted in May. The years ahead have bigger projections. Although in a positive sense, the projection remains to return to a surplus in 2020/21.



New Zealand SESSION WRAP – 19TH DECEMBER 2016
WESTPAC CONSUMER CONFIDENCE SURVEY

• Westpac Consumer Sentiment (Q4): 113.1. Previous 108.0

Consumers seem much more upbeat with an increase of 5.1 points. The level is now above it’s longer run average for the first time since mid 2015 with the survey showing gains in confidence widespread. Westpac commented that there was a ‘humming along’ in the economy with the labour market improving.

NOVEMBER SERVICES PMI

• Services PMI: 57.9. Previous 56.3 (revised from 56.6)

Good result despite the earthquakes in New Zealand. The report showed that tourism had boomed with a continued rise in immigration boosting services demand.

FURTHER NEWS

• Building Consents (MoM) Oct: 2.6%. Previous -0.2%
• ANZ Business Confidence: 21.7. Previous 20.5
• NBNZ Own Activity Dec: 39.6%. Previous 37.6%

NZDUSD had fallen over 270 pips during the weekend following a bearish channel. Currently trading at 0.6972

 

[artfor]

Like your strategy, well done.

 

[Navigation FX]

@artfor thanks, we appreciate that a lot. Hope you learn something here that will help your trading

 

[Navigation FX]

AUSTRALIA SESSION WRAP – 20TH DECEMBER 2016
RBA MINUTES MINUTES
Minutes of the Reserve Bank of Australia (RBA) monetary policy board meeting back in the first week of this month.

• Key points include;
  • Rising AUD could complicate an economic transition, noted it has recently fallen vs US dollar
  • Taking into account latest data, judged steady policy right for growth, inflation
  • Balancing benefits of low rates against the risks to household debt for further easing
  • Data suggested for Q3 GDP growth would be weaker than expected
  • There is considerable uncertainty about momentum in the labour market, still saw an excess capacity
  • Inflation expected to stay low for some time before rising to more normal levels
  • Housing market has strengthened overall. There are not tighter lending rules and higher fixed rates
  • High commodity prices pointed to another rise in terms of trade for Q4
  • There is a drag from the mining investment to lessen, export volumes to add growth
  • Members noted that international background were more positive, however still risks to outlook
  • Global inflation outlook is more balanced than in some time

The minutes is telling us that the bank shows there is a slack in the labour market, and there is uncertainty about employment growth momentum. Inflation is still expected to stay low for some time. We don’t expect to see a lower cash rate any time soon. However, this is just a speculation, we will be watching the data closely over the next 2 months, with the next RBA meeting on the 7th Feb.

For the full meeting minutes, see here

AUDUSD has been on a long bearish run for some time now. Currently trading at 0.7252


New Zealand SESSION WRAP – 20TH DECEMBER 2016
FOOD PRICE INDEX

• FPI (MoM) Nov: -0.1%. Previous -0.8%

Taken from the New Zealand Statistics website

Monthly change
Food prices fell 0.1 percent in the November 2016 month. After seasonal adjustment, food prices rose 0.3 percent.

In November 2016 compared with October 2016:

• Fruit and vegetable prices fell 4.3 percent (down 0.9 percent after seasonal adjustment).
• Meat, poultry, and fish prices rose 0.5 percent.
• Grocery food prices rose 1.0 percent (up 0.6 percent after seasonal adjustment).
• Non-alcoholic beverage prices rose 0.7 percent.
• Restaurant meals and ready-to-eat food prices rose 0.1 percent.

Annual change
Food prices increased 0.6 percent in the year to November 2016.

In November 2016 compared with November 2015:

• Fruit and vegetable prices rose 0.6 percent.
• Meat, poultry, and fish prices fell 1.4 percent.
• Grocery food prices rose 1.2 percent.
• Non-alcoholic beverage prices fell 0.9 percent.
• Restaurant meals and ready-to-eat food prices rose 2.0 percent.

Key average prices

• Two litres of blue-top milk was $3.33 in November 2016.

NZDUSD continues to fall short, currently trading at 0.6913 on the trading session.

 

[Navigation FX]

New Zealand SESSION WRAP – 21st DECEMBER 2016
KEY DATA

• Exports Nov: 3.86B. Previous 3.91B
• External Migration & Visitors Nov: 11.00%. Previous 14.00%
• Imports Nov: 4.56B. Previous 4.72B
• Permanent/Long-Term Migration Nov: 6,200. Previous 6,240
• Trade Balance (YoY) Nov: -3,180M. Previous 3,270M
• Trade Balance (MoM) Nov: -705M vs. -500M exp. Previous -815M
• Visitor Arrivals (MoM): 0.5%. Previous 2.3%
• MI Leading Index (MoM): 4.1%. Previous 10.1%

Just okay data from New Zealand really. The Trade Balance was a big miss, with it showing at -705M, a miss on its forecast by 205M. However, still better than previous months. Exports fell to 3.86B from the previous of 3.91B.

NZDUSD support at 0.6882

 

[Navigation FX]

New Zealand SESSION WRAP – 22nd DECEMBER 2016

Data from New Zealand has started to really push out since the earthquake last month.

GDP

• Current Account (YoY) Q3: -7.48B vs. -7.58B exp. Previous -7.38B
• Current Account (QoQ) Q3: -4.89B vs. -5.01B exp. Previous -0.95B
• Current Account % of GDP Q3: -2.90% vs. -3.00%. Previous 2.90B
• GDP (QoQ) Q3: 1.1% vs. 0.9% exp. Previous 0.7%
• GDP (YoY) Q3: 3.5% vs. 3.7% exp. Previous 3.4%
• GDP Annual Average Q3: 3.0% vs. 3.2% exp. Previous 2.7%
• GDP Expenditure (QoQ) Q3: 1.4%. Previous 1.2%

Stats NZ said that the data looking is looking very positive with an increase in broad based growth. 13/16 industries were up, with the main weakness coming from agriculture. Household spending has continued strong growth, increasing 1.6 percent this quarter, following a 2.0 percent increase in the June quarter.

With respect to exports, growth had fell over the September quarter but export volumes remain high. Imports rose in the September quarter, reflecting large purchases of aircraft’s.

Service industries continued to grow, whilst manufacturing activity rose on the back of food, beverage and tobacco manufacturing; and transport equipment, machinery and equipment manufacturing.

Construction grew 2.1 percent.

GDP per capita increased by 0.6 percent this quarter, following a 0.2 percent increase in the June quarter.

NZD/USD currently trading at 0.69120

 

[Navigation FX]

AUSTRALIA SESSION WRAP – 3rd January 2017

AIG MANUFACTURING INDEX

• AIG Manufacturing Index Dec: 55.4. Previous 54.2

Good numbers indicating to us that the sector is expanding.

Note: A number over 50 means that the sector is expanding. A number below 50 means that the sector is contracting.

The index showed some solid increases, but also a noticeable decline in unemployment

• Production 58.2 (+4.7 from November 16)
• New Orders 60.6 (+1.1)
• Exports 68.5 (+12.6)
• Unemployment 47.4 (-4.9)
• Wages 62.3 (+8.5)

Inflationary prices were up marginally to 62.8 (+0.3)

AIG found that;

• Six of the seven activity sub-indexes improved from November
• Strong expansions in new orders (60.6 points) and sales (58.8 points) continued in December, while exports surged ahead (68.5 points), Production (58.2 points) also expanded more strongly while deliveries (52.4 points) continued to grow
• Employment (47.4 points) slipped in December, in line with recently weaker jobs growth
• Five of the eight sub-sectors expanded in December (on a three month moving average basis). Both food & beverages (57.1 points) and petroleum & chemical products (56.5 points) continue to perform strongly. Machinery & equipment (55.0 points) is showing signs of continued resilience. Non-metallic mineral products (57.9 points) bounced back to expansionary conditions while printing & recorded media (48.3 points) slipped from stable to mild contraction. Metal products (48.0 points) and textiles & clothing (44.3 points) remained contractionary, but at a weaker pace of contraction than previously
• Comments from manufacturers in December indicate that demand (albeit somewhat mixed) appears to be improving again after a weak patch in the latter half of 2016. The recovery in commodity prices has led to better conditions for manufacturers exposed to the mining sector, with some revival of mining investment and maintenance spending. However, surging energy costs, weaker local demand and slower spending on particular major projects is depressing activity for some manufacturers

The Australian Industry Group (AIG) Manufacturing index rates the relative level of business conditions in the sector. The data is based on a survey of about 200 manufacturers. A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Traders tend to watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

 

[Navigation FX]

AUSTRALIA SESSION WRAP – 9th JANUARY 2017

AIG CONSTUCTION PMI

• AIG Construction Index Dec: 47.0. Previous 46.6

Numbers up by 0.4 points. More on the construction PMI, the ‘key points’ from December’s report as highlighted by AIG:

All four sectors contracted

• House building declined for a fifth consecutive month as activity in the sector moderated further from robust mid-year levels
• Apartment building also continued to contract, although the sector’s pace of decline was the slowest in three months
• Commercial construction remained subdued, contracting for a fifth month, and at a rate that was steeper than in November
• Engineering construction activity also continued to decline in December, although its rate of contraction was the slowest in three months due to new project work acquired by some businesses
• The key activity sub-index remained below 50 points in December (i.e. contracted) for a third consecutive month, while new orders fell for a fifth month
• Reflecting these tough operating conditions, employment fell in December at its most pronounced rate in nine months
• Residential builders mainly commented on slow market conditions due to fewer customer enquiries, soft new orders and increased caution by prospective buyers at the close of 2016.  Despite the continued winding back in mining related construction, there were reports by engineering construction businesses of an improving inflow of infrastructure work, particularly transport projects in the eastern states
• Reports from survey respondents also indicated on-going pressures from a highly competitive pricing environment and tight margins

The given importance of the building industry, the domestic economy is a concern.

What was most important in the AIG report:

• employment fell in December at its most pronounced rate in nine months

Remember that employment increases drives gains in spending. Declines in employment have an opposite and negative effect.

FURTHER DATA

• ANZ Internet Job Ads (MoM) Dec: -1.9%. Previous 1.7%

• ANZ Job Advertisements (MoM) Nov: -1.9%. Previous 1.6% – Comments from ANZ, labour market loses ‘momentum’

• Building Approvals (MoM) Nov: 7.0% vs. 4.6% exp. Previous -2.3% – Tend estimate for total dwellings units approved fell 2.9% in November and has fallen for a consecutive six months.

AUDUSD on the rise from the trading session, with a resistance at 0.7356

 

[Navigation FX]

Australian November 2016 Retail Sales (MoM) – 10th JANUARY 2017 Report

• Retail Sales (MoM) Nov: 0.2% vs. 0.5% exp. Previous 0.5%

Miss for Australia, with the result missing out on expectations and a decline since it’s peak in August 2016.

Australian buyers dipped on the data

 

[Navigation FX]

AUSTRALIA SESSION WRAP – 19TH JANUARY 2017
EMPLOYMENT

• Employment Change Dec: 13.5K vs. 10.0K exp. Previous 37.1K
• Full-Time Employment Change Dec: 9.3K. Previous 38.4K
• Part-Time Employment Change: 4.2k. Previous -1.3K
• Participation Rate Dec: 64.7% vs. 64.6% exp. Previous 64.6%
• Unemployment Rate Dec: 5.8% vs. 5.7% exp. Previous 5.7%

Details of the report:

• Employment increased 13,500 to 11,985,900. Full-time employment increased 9,300 to 8,176,500 and part-time employment increased 4,200 to 3,809,500.
• Unemployment increased 14,700 to 741,100. The number of unemployed persons looking for full-time work increased 15,000 to 528,900 and the number of unemployed persons only looking for part-time work decreased 300 to 212,200.
• Unemployment rate increased 0.1 pts to 5.8%.
• Participation rate increased 0.1 pts to 64.7% (basically unchanged)
• Monthly hours worked in all jobs increased 6.9 million hours to 1,670.4 million hours.

Year-on-year employment growth was 0.7 per cent, which was less than half the average growth, of 1.8 per cent, from the past 20 year.



For the full report, see here at the Labour Force, Australia

JP Morgan said more on the employment report:

• While not showing any dramatic movements through time, the fact that the unemployment rate has moved up from the recent lows and is unchanged over the past six to 12 months does break the improving trend that was in play from late 2014 to late 2015. The participation rate is well down over the same period, so the change in trend looks quite fundamental.
• It also is a departure from the narrative embedded in the RBA’s forecasts, which is that excess capacity will be worked off over time, pushing the jobless rate lower and facilitating a gradual pick-up in inflation.
• A stalling labour market recovery similarly lends weight to concerns that domestic demand is losing momentum, as flagged in the business surveys and in recent consumption data.

Goldman Sachs:

• Evidence increasing that Australia is at a positive transition point for nominal growth, inflation and wages
• Unemployment rate has been unchanged over 9 consecutive months (trend basis). Today’s rise partly reflects a rebound in participation rate
• Q4 improvement in full-time employment will alleviate RBA concern
• If downside tail risks continue to subside and broader momentum improve as expected, RBA’s next policy move will be 25bp hike in Q1 of 2018

OTHER DATA

• MI Inflation Expectations: 4.3%. Previous 3.4%

New Zealand SESSION WRAP – 19th January 2017
BUSINESS NZ PMI

• Business NZ PMI (Dec): 54.5. Previous 54.5

Business confidence in New Zealand remains unchanged on the month. The New Zealand economy is keeping strong, even following the recent earthquakes.

The indicator, the Business NZ Manufacturing PMI at 54.5 means its at a 13-month low established since November. When the PMI is strongly in expansion territory for over a year long, you know that the confidence is going well.

A note on the survey and something to keep an eye on is that ‘new orders’ have fallen to a 2-year low.





BUILDING APPROVALS

• Building Contests (MoM) Nov: -9.2%. Previous 2.0%

Building approvals for December is coming in at a drop of 9.2% on the month. Whilst the previous month, the figures were revised lower to +2% from +2.6%. Year-on-year coming in at +13%

In November 2016, building consents were issued for 2,973 new dwellings.

• 1,886 houses
• 507 townhouses, flats, and units
• 375 apartments
• 205 retirement village units.

The seasonally adjusted number of new dwellings consented fell 9.2 percent in November 2016 compared with October 2016. This followed a 2.0 percent rise in October. The trend is showing signs of decreasing after reaching a 12-year high in mid-2016.

In the year ended November 2016, 30,303 new dwellings were consented – up 13 percent from the November 2015 year.

Including alterations, the value of building work consented in the November 2016 month was $1.6 billion, comprising $1.2 billion of residential work and $411 million of non-residential work.



NZDUSD has been showing some bullish sentiment. Currently trading near 0.7141