Release Explanation: The Australian AIG Index (services and manufacturing) is a seasonally adjusted composite index based on the diffusion indexes for production, new orders, deliveries, inventories and employment. Each category has its own weight correspondent to its effect on the economy. A reading above 50 indicates expansion, while a reading below 50 indicates contraction. The distance from 50 is indicative of the strength of the expansion or decline.
Trade Desk Thoughts: The Australian AIG services sector activity has declined for a eleventh consecutive month in the services sector in February, stated the Australian Industries Group’s report. The index fell by 8.8 points to 32.2 and remains below the key 50.0 level which separate’s expansion from contraction. The report indicates that the services sector has slumped badly on the month in virtually all sectors and all states were in deep decline. This was underpinned by weak consumer and business confidence levels, falling demand, and other impacts that were instigated by the global slowdown. The only sector to increase for the month was communication services, which rose for a second month.
Forex Technical Reaction: The aussie has not reacted significantly from this release. Price is slightly above the neutral LFB pivot point at .6375. Later this evening the GDP is due out of Australia and traders will likely be waiting for that announcement before committing.