Westpac Leading Index

The January Westpac Leading Index came in weaker at 0.2% versus the prior reading of 0.5% (revised higher to 0.6%.) The Aussie has had a limited reaction to this release as it traded through the 92 cent handle at the end of the prior trading day and is now trading at .9185 level. On the chart below we see the AUD/USD pair had finally penetrated the 92 cent handle at the end of the prior trading day after creating a short-term double top in March. This could prove to be a bullish signal for the AUD and other commodity currencies.

RBA Meeting Minutes

The RBA Meeting Minutes have moved the AUD/USD pair lower by ~ 20 pips as the market remains in a tight range to start the new trading day, early in the Asian session. The details of the minutes are as follows:

• Global growth at ‘reasonable pace’ is the most likely result.
• “Appropriate for rates to gradually move to normal.
• Australia growth may now be ‘at or close to trend.’
• March Minutes show the RBA is ready to respond to other outcomes.
• Mining industry to provide ’significant’ growth boost.
• Europe debt concerns unlikely to impact global growth.
• Europe remains ‘weakest area’ in global economy.
• March increase a ‘timely’ step toward normal rates.
• Main risk from Greek debt problems is contagion.
• Recent economic figures ‘quite firm.’
• Established home market is very ‘buoyant.’
• Underlying inflation falling further in near term.
• Discussed sovereign risk issues associated with Greece.
• Policy decision based on ‘most likely’ outcome.’

Aussie Unemployment Reprt

The February Australian Unemployment Report came out worse than expected, sending the risk pairs toward session lows. The economywas expected to grow by 15,000 new employees, but February’s job growth expanded by only 400. The employment rate came in as expected at 5.3%. The AUD immediately dropped on the release, however finding support again on the trendlne we reviewed yesterday.

RBA’s Lowe on the Wire

The RBA’s Lowe had the following comments on the global economy and China’s policy, the market had a limited reaction to these comments:

• Global action prevented more serious downturn.
• Strength of Asian rebound was a surprise.
• Companies are generally more confident but crisis has made them more cautious.
• Capital spending plans still ‘a bit’ below average.
• China policy tightening encouraging.
• China policy actions are positive development.

Aussie NAB Business Confidence

Australian Business Confidence and Conditions were released better than the prior month moving the AUD off session lows and back above the 91 cent handle. NAB Business Confidence came in at 19 versus the prior reading of 15 and Conditions came in at 8 versus the prior reading of 3.

Australian Q4 GDP

The Aussie Q4 GDP came in better year over year and as expected quarter over quarter, however much better than the Q3 readings. The AUD initially gained a bid on the release, but has since subsided to pre-release levels in the middle of the 90 cent handle against the USD. The details of the release are as follows:

GDP (QoQ) - Survey:0.9%   Actual:0.9%   Prior:0.2%

GDP (YoY) - Survey:2.4%   Actual:2.7%   Prior:0.5%

RBA Rate Decision

The market anticipated a 25 basis point hike in the Australian interest rate and the market got it this time around as the RBA raised rates to 4%. The AUD/USD pair quickly popped to .9031, however has since moved below the 90 cent handle as this hike has been built into the price for sometime. The accompanying comments from the RBA did not help the AUD sustain its early bid, the comments were as follows:

• Expansion still hesitant in major countries.
• Growth likely to be close to trend.
• Many countries have ongoing excess capacity.
• Appropriate for rates to be closer to average.
• Growth in Asia continued to be quite strong.
• Today’s increase a step toward average rates.
• Home loan approval moderated in recent months.
• Concerns regarding some sovereigns remain elevated.
• Dwelling prices have risen significantly over the past year.
• Australia 2009 economy stronger than expected.
• Lenders becoming more willing to lend.
• Australia’s jobless rate appears to have peaked.
• Economic growth has been close to trend for a few months.
• Growth in Aussie economy at or close to trend.

Mixed Economic Data from Australia

A mix of both positive and negative economic releases out of Australia gave the AUD/USD pair a quick run up before trading down to levels lower than it was prior to the release. The seasonally adjusted Retail Sales figures came in much better than expected for January at +1.2% versus the expectation of +0.5% and the prior release of -0.7% (revised lower to -0.9%.) However, the Building Approvals came in much worse for January which sent the AUD initially lower. This is all in prelude to rate decision expected at 10:30 pm est.

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