Last Week Recap
The Australian Dollar traded within a 3 cent range last week, bouncing up to a high of 0.7263 and a low of 0.6954. Key drivers for the local currency again last week was a surge in price of commodities, especially gold and a retreat in the price of Oil and heightened tensions in the Middle East. In addition to this the Retail Sales release on Wednesday provided some evidence that the retail sector had a busy November, with the figure coming in at 0.4% compared with the previous months reading of -0.4%. Thursday's release of the November Trade Balance didn't help the Aussies cause either with the figure slumping to a reading of 1.448 Billion. The initial reaction on the release was fairly muted, however in offshore trade the AUD fell almost a cent to a low of 0.6954.
Much like its Trans Tasman rival the New Zealand appeared to track AUD direction last week. The range for the Kiwi last week was a 3 cent range with the weekly high being just above 0.60 cents (all be it briefly) and the low of 0.5810. Traders still feel that the 60 cents mark will be tough to break through and with little significant data out of New Zealand last week and absolutely nothing of value this week, the dollar will take direction from offshore events and happenings.
The Greenback held firm against both the EURO and Yen last week but lost some ground against the Pound. The decision last week by the Bank of England to cut it official cash rate by a further 50 basis points was enough for the Pound to rally against the Greenback, jumping almost a cent and a half on release to 1.52. In other news, President elect Barrack Obama's Rescue Economic Rescue Package was released with the key focus being on tax cuts and pumping monies into health, housing and job creation.
The Week Ahead
USD: There is a bucket of data out this week which should provide traders with a closer insight into the current economic situation in the United States. It all starts on Tuesday with the release of US Trade Balance for the month of November. On Tuesday is the release of Advanced Retail Sales figures for the month of December. This data can be very significant. This data can provide an insight into consumer confidence. Later in the week on Friday is the release of Consumer Price Index for the month of December which is expected to be lower than the previous month. Also out on Friday is the release of the University of Michigan Confidence survey. The forecast for declining consumer confidence levels down from 60.1 to 59 will indicate falls in income or wages and precede drops in consumer spending. This should provide some interesting trading patterns for the Big Dollar against the other majors.
AUD: On the data front this week in Australia is fairly light. It all kicks off on Wednesday with the release of the Investment Lending data for the month of November. This data measures the value of loans provided to individuals and corporations. Also on Wednesday is the release of Australian Home Loans data for the month of November. This data is a important indicator on the level of activity in the housing market. On Thursday all eyes will be on the Unemployment rate data for December. With a forecast that the Unemployment Rate will increase can lead to the RBA seeking further rate cuts in the future.
NZD: There are two key indicators coming out of New Zealand this week. All starting today with the release of NZIER Business Opinion Survey. Although this data is seen as medium importance this data is actually a good early indicator for the direction of the New Zealand economy. On Tuesday we see the release of New Zealand Building Permits. Later in the week on Thursday we will see the release of QV House Price index. The QV Quarterly House Price Index measures the movement in house prices for local council areas throughout New Zealand.
GBP: There is fairly light data out of the UK this week; Data slated for this week begins on Tuesday with the release of the RICS House Price Balance for the month of December. The forecast is for this data to be down from the previous month indicating a weaker housing market, thus indicating a weaker overall economy. Also on Tuesday is the release of the Visible Trade Balance data for the month of November. Visible Trade data can give critical insight into developments in the economy and into foreign exchange rates.
EUR: The data front in the early part the week is fairly light with no significant releases due for release until mid to late week. The first key Data release will be Wednesday's German Real GDP Growth. On Thursday is the release of Euro Zone Consumer Price Index. The Consumer Price Index is the key indicator for inflation in the Euro Zone. However on Thursday all eyes will be on the European Central Bank when it meets. The forecast is that the ECB will cut interest rates from 2.5% to 2%.
JPY: On the data front this week in Japan begins with Today's release of the Japanese Trade Balance for July. Because Japan's economy is highly export-led, trade data can give critical insight into developments in Japan's economy and provide direction for the Yen. Also today will see the release of Japan's Current Account. On Tuesday The Economy Watchers Survey is due to be released. This data will give a great insight into existing and future economic trends.