RBA Unexpectedly Keeps Rates Unchanged @ 4.25%

The RBA did not move 25 basis points lower as expected instead kept rates unchanged, moving the Aussie higher against all its counterparts, moving ~8 pips higher against the USD initially. The RBA added the following comments suggesting there was room to move on rates if demand weakened:

• Financial Market sentiment remains skittish, has improved.
• Term funding markets have reopened.
• Economic growth close to trend.
• Labor markets softened during 2011.
• CPI inflation has declined as expected.
• Year end CPI to fall further in next quarters.
• Underlying inflation is about 2.5%.
• Credit growth remains modest.
• House signs show some sign of stabilizing at end of 2011.
• Terms of trade have started to decline.

Aussie AIG Performance of Services Index

The Aussie AIG Performance of Services Index in January rose to an expansionary 51.9 from 49 the prior month.

Aussie Trade Balance

The Aussie Trade Balance came in at a larger surplus than expected (1200M) and the prior reading (1380M) at 1709M. The market gained a mild bid on the release, but the session could remain muted as there is a limited amount of new data on the calendar.

Aussie Business Confidence

NAB Business Confidence rose from the prior month, coincidentally risk has caught a bid here early in the Asian session.

• NAB Business Conditions – Actual:1   Prior:1
• NAB Business Confidence – Actual:3   Prior:2

Aussie House Prices

Aussie House Prices declined in December, putting additional pressure on the Aussie after Fitch Ratings placed Australian banks on Credit Watch. The details of the release are as follows:

• RPData – Rismark House PX Raw – Actual:-1.2%   Prior:-0.2%
• RPData – Rismark House PX S.a – Actual:-0.2%   Prior:0.1%

Aussie CPI

The Consumer Price Index for the 4th quarter in Australia came in above expectations on a year over year basis, but weaker quarterly, initially pushing the AUDUSD pair lower. The details of the release are as follows:

• CPI (QoQ) – Survey:0.2%   Actual:0.0%   Prior:0.6%
• CPI (YoY) – Survey:3.3.%   Actual:2.6%   Prior:3.5%

Aussie Employment Report

The AUDUSD fell by 50 pips initially as the Aussie employment report showed a loss of -29.3K jobs versus the estimate of a 10K increase. However the currency has quickly recovered as a look at the details revealed the loss was driven mostly by a loss of part-time jobs following the holiday season. The details of the release are as follows:

• Employment Change – Survey:10K   Actual:-29.3K   Prior:-6.3K
• Unemployment Rate – Survey:5.3%   Actual:5.2%  Prior:5.3%
• Full Time Change – Survey:18.8K   Actual:24.5K  Prior:-39.9K
• Part Time Change – Survey:-8.8K  Actual:-53.7K  Prior:33.6K

The Aussie wedge we reviewed yesterday continues to hold.

ANZ Consumer Confidence

Consumer Confidence in Australia came in much stronger that the prior month in January with the Index printing a 116.1 (108.4 prior) and 7.1% lift (-0.6% prior.)

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