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Australian Retail Sales Drop In June

RTTNews - Retail sales in Australia dropped in June, after rising in each of the previous three months, the Australian Bureau of Statistics said Tuesday.

On a seasonally adjusted basis, retail sales dropped 1.4% month-on-month in June, after rising 1% in the preceding two months and 2% in March. Total retail sales amounted to A$19.4 billion, down from A$19.7 billion in May.

In June, department stores showed the steepest drop in sales, by 8.8%, followed by a 7.4% decline in clothing and soft goods retailing. Most other groups showed sales declines, but household goods retailing showed a 2.9% increase in sales.

Regionwise, Queensland recorded the steepest fall in sales by 3.5%, followed by a 2.8% drop in sales in the Northern Territory. New South Wales was the only region to record a 0.1% increase in sales.

On the basis of the original series, retail sales fell 2.9% in June, after 2.5% growth in the preceding month.

In the second quarter, retail sales rose a seasonally adjusted 2% sequentially, faster than the 1% growth in the first quarter, and marked the fourth consecutive quarterly rise. Economists expected an increase of 0.5%. Retail sales totaled A$55.03 billion in the June quarter.

The second quarter's growth reflected a rise in sales in all categories, with sales of clothing and soft goods retailing showing the maximum rise of 3.7%. This was followed by a 3% growth in household goods retailing.

Among the regions, all regions showed growth in sales with the exception of Northern Territory, where retail sales fell 2.9%.

Further, the statistical bureau also released data on house prices for the second quarter. The house price index for established houses, which is the weighted average of prices in eight capital cities, increased 4.2% in the second quarter, after falling for the previous four quarters. In the first quarter, the house prices were down 1.5%. Economists expected prices to increase 2% in the second quarter.

The highest price rise of 5.2% was in Melbourne, while the lowest rise of 2.4% was in Darwin.

On an annual basis, house prices fell 1.4% in the second quarter, slower than a revised 6.2% drop in the first quarter. Economists expected a 4.9% decline. The prices have now fallen for three consecutive quarters. House prices declined the most by 3.7% in Perth, followed by a 3.3% in prices in Brisbane. However, the fastest rise in prices of 11% was seen in Darwin.

There were other signs of improvement in the economy, with business conditions remaining more stable through the second quarter. Expectations for the third quarter are optimistic.

Data released by the Australian Chamber of Commerce and Industry Tuesday showed that the index of general business conditions moved up to 35.4 in the June quarter from 34.1 in the March quarter. Moreover, the index of expected economic performance increased to 36.9 in the second quarter from 30.4 in the preceding quarter.

Earlier in the day, the Reserve Bank of Australia also held its key interest rate unchanged at a 49-year low of 3%.

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Geithner loses his cool at regulators meeting: report

U.S. Treasury Secretary Timothy Geithner blasted top U.S. regulators in an expletive-laden tirade amid frustration over President Barack Obama's faltering plan to overhaul financial regulation, the Wall Street Journal said on Monday, citing people familiar with the meeting.

Geithner told regulators that enough is enough, the newspaper said, citing one person familiar with the meeting last Friday with Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp Chairman Sheila Bair.

The Treasury Secretary said regulators had been given a chance to air their concerns, but that it was time to stop, the newspaper said, citing the person.

A Treasury Department representative had no immediate comment. The Fed, the SEC and the FDIC did not immediately return calls seeking comment.

Obama in June unveiled a financial regulatory overhaul, sometimes called the biggest since the 1930s. Among other things, the plan would give the Fed added powers, award the government more power to break up troubled companies, and create a new agency to oversee consumer finance.

Many major banks and industry trade groups however have criticized the plan, as have some regulators wary that any redistribution of power would reduce their own.

According to the newspaper, Friday's roughly hour-long meeting was unusual because of Geithner's repeated obscenities and his aggressive posture toward regulators generally deemed independent of the White House.

The newspaper said Geithner told attendees that the administration and Congress set policy. It also said the Treasury Secretary, without singling out officials, raised concerns about regulators who have questioned the wisdom of giving the Fed more power.

Schapiro and Bair have argued that more authority should be shared among a council of regulators.

(Reporting by Jonathan Stempel; Additional reporting by David Lawder in Washington, D.C.; editing by Carol Bishopric)

Dollar Remains Soft as China Data Boosts Commodities

Dollar remains generally soft as the week starts, edged lower against most major currencies before recovering mildly. Solid data from China, which saw CLSA PMI rose to highest level in a year at 52.8 in June, boosted commodity prices. Crude oil breaches 70 level which in turn gives additional pressure on the greenback. Asian stocks are generally up even though Nikkei closes down 0.04%. While come consolidation might be seen today, the greenback is expected to be under pressure in a week full of event risks.

US Treasury Geithner said that there are signs that recession is easing and positive growth of be seen in the second half of the year. But it's still not clear how strong the growth will be. Nevertheless, Geithner said that unemployment rate may not peak until second half of 2010 and may necessitate another extension in unemployment benefits. Geithner said that the current deficit is unsustainable but didn't respond directly on the possibility of tax increase.

On the data front, German retail sales expectedly dropped for another month in June by -1.8% mom while yoy rated improved to -1.6%. Manufacturing data will be the main focus today with Swiss SVME PMI, UK Manufacturing PMI and finalized reading on Eurozone PMI featured in the European session. US ISM Manufacturing index is expected to improve for the sixth consecutive month to 46.5 in July. More on ISM Manufacturing in Event To Watch: US ISM Surveys

Technically, intraday bias in the dollar index remains on the downside as long as 78.52 minor resistance holds. Current decline, which is treated as the last leg of the five wave sequent from 89.62, is expected to extend further to 77.69 support and below. Nevertheless, we'll start to look for reversal signal as the index enter into 75.89/77.69 key support zone. On the upside, above 78.52 will turn intraday outlook neutral first. But break of 79.66 resistance is needed to indicate that dollar index has bottomed out. Otherwise, short term outlook remains bearish.

USD/CHF Daily Outlook

Intraday bias in USD/CHF remains on the downside with 1.0751 minor resistance intact. Current fall from 1.0933 should extend further to 1.0590/0622 support zone first. Break there will confirm medium term fall resumption for 1.0366 low. On the upside, above 1.0751 will turn intraday outlook neutral and bring consolidation. But break of 1.0933 resistance is needed to revive the case that USD/CHF has bottomed out. Otherwise, short term outlook remains bearish.

In the bigger picture, there is no change in the broader view that price actions from 1.2296 are consolidation to whole medium term rise from 0.9634 only, with fall from 1.1963 as the third leg. Indeed, the possible five wave structure of such decline from 1.1963 argues that it's the last leg of consolidation and is near to completion. Hence, while another fall is likely and a marginal low below 1.0366 cannot be ruled out, downside should be contained by 61.8% projection of 1.1740 to 1.0590 from 1.1021 at 1.0310 to complete the fall from 1.1963 and the consolidation from 1.2296. On the upside, above 1.0933 resistance will now argue that fall from 1.1963 has completed and break of 1.1021 will solidify the bullish case and pave the way for strong rebound.

Economic Indicators Update

Kate Middleton

Kate Middleton

Kate Middleton