Release Explanation: This is a composite index used to forecast short to mid-term growth in the Australian economy. Changes in the indicators selected are thought to precede developments in the economy as a whole. Therefore, an increase in the index forecasts economic expansion while a decrease in the index projects a future contraction. The Conference Board of Australia considers eight indicators in the calculation of the index: money supply, share prices, rural goods exports, building approvals, sales to inventories ratio, gross operating surplus, yield spread, and medium-term government bond yields. The index is calculated as a percent change off a base year; headlines report the figure in a percent change from the previous month.
Trade Desk Thoughts: The leading index for Australia has decreased 0.9 percent for the month of December, falling to a reading of 114.1. This is the fourth consecutive decrease for the index. The leading index began its descent in September of 2008 and it has only accelerated in recent months as the fall rivals levels seen in early 2001. In the leading index, two of the seven components increased. Meanwhile, the coincident index rose for December rose sharply fueled primarily by a jump in retail sales as a result of the economic stimulus package. Three of the four components increased during December and they were, retail trade, household gross disposable income, and industrial production.
Forex Technical Reaction: The aussie has not had a significant reaction to this release and is currently trading below the 20 day moving average which has also converged with the neutral pivot point to act as double resistance.