{"id":143350,"date":"2019-03-10T12:10:07","date_gmt":"2019-03-10T16:10:07","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=143350"},"modified":"2019-03-09T11:12:54","modified_gmt":"2019-03-09T16:12:54","slug":"the-trade-week-ahead-currency-point-aud-well-that-escalated-quickly","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/03\/the-trade-week-ahead-currency-point-aud-well-that-escalated-quickly\/","title":{"rendered":"The Trade Week Ahead \u2013 Currency Point: AUD &#8211; Well that escalated quickly"},"content":{"rendered":"<div id=\"inves-3305748918\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">March 10, 2019<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p><strong>By <\/strong><a href=\"https:\/\/www.fpmarkets.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>FPMarkets.com<\/strong><\/a><\/p>\n<p><iframe loading=\"lazy\" id=\"_dytid_9341\" src=\"https:\/\/www.youtube.com\/embed\/AbG_mx_L6l8\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>Like rats on a sinking ship, one by one we saw economist after economist jumped off the Australian hike path and onto the cut bandwagon.<\/p>\n<p>The market too followed suit the interbank market is now fully pricing in a 25-basis point (bps) cut by December 2019 with a 50% chance of a further 25bps out of the official cash rate by year end.<\/p>\n<p>It\u2019s perfectly summed up in this chart from the ASX.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-20199\" src=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/ASX-550x353.jpg\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" srcset=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/ASX-550x353.jpg 550w, https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/ASX.jpg 626w\" alt=\"\" width=\"550\" height=\"353\" \/><\/p>\n<p>Why has the market got so dovish on the cash rate so fast? \u2018Growth is ending\u2019, \u2018per capita GDP is now in recession\u2019 \u2018household sending is collapsing\u2019. The pencil-necking was large make no mistake.<\/p>\n<p>I would agree that growth is slowing, and that consumption has been come a concern.<\/p><div id=\"inves-1022392179\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>However, let\u2019s look at the actuals from this week GDP plus a few other inputs that feed into the AUD.<\/p>\n<p><a href=\"http:\/\/go.fpmarkets.com\/visit\/?bta=35137&amp;nci=5462\" target=\"_Top\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/fpmarkets.ck-cdn.com\/tn\/serve\/?cid=361646\" width=\"728\" height=\"90\" border=\"0\" \/><\/a><\/p>\n<p>First the GDP numbers:<\/p>\n<ul class=\"ncbullets\">\n<li>Quarterly GDP grew at 0.2%, missed estimates and was structurally weak in the area of private investment.<\/li>\n<li>Year-on-year (yoy) was the big miss at 2.3% vs 2.5% consensus estimate \u2013 it was actually below the lowest estimate given.<\/li>\n<li>\u2018Wealth effect\u2019 issues: collapse in big ticket items such as car sales and furnishings<\/li>\n<li>Household spending in Australia\u2019s largest state NSW collapsed to 0.1%<\/li>\n<\/ul>\n<p>However,<\/p>\n<ul class=\"ncbullets\">\n<li>Labour compensation was up 4.3% yoy<\/li>\n<li>Corporate profits jumped 11% yoy<\/li>\n<\/ul>\n<p>Yes growth is moderating and yes productivity isn\u2019t growing which does paint a gloomy picture. However, some granular parts that suggest there is no \u2018scorched earth\u2019 scenario coming.<\/p>\n<p>The question then becomes, what did the AUD do on this news?<\/p>\n<p><b>AUDUSD<\/b><br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-20198\" src=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/AUDUSD.jpg\" alt=\"\" width=\"546\" height=\"372\" \/><\/p>\n<p><b>EURAUD<\/b><br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-20197\" src=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/EURAUD-550x383.jpg\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" srcset=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/EURAUD-550x383.jpg 550w, https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/EURAUD.jpg 567w\" alt=\"\" width=\"550\" height=\"383\" \/><\/p>\n<p><b>AUDNZD<\/b><br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-20196\" src=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/AUDNZD-550x385.jpg\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" srcset=\"https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/AUDNZD-550x385.jpg 550w, https:\/\/www.fpmarkets.com\/wp-content\/uploads\/2019\/03\/AUDNZD.jpg 567w\" alt=\"\" width=\"550\" height=\"385\" \/><\/p>\n<p>It clearly tested some longer-term support lines.<\/p>\n<p>However, since then two things have happened that bring a bit of focus into our trade thinking.<\/p>\n<p>First, the Australia trade balance for January was the second-best print on record beaten only by the December 2016 print. At $4.5 billion with a 5% jump in exports it reduces the current account deficit with some estimating it could reduce the current account deficit to 1% of GDP. That will take the pressure off Australia\u2019s reliance on foreign capital \u2013 A direct AUD lever.<\/p>\n<p>Second, inflation is bottoming out, it anaemic but it is holding at 1.8% there forcing of the RBA.<\/p>\n<p>This week has clearly put downward pressure on the AUD (as it should). However, the argument now is: has this week created a scenario that is structure in nature or just cyclical?<\/p>\n<p>In my opinion until the RBA is \u2018forced\u2019 to cut rates this is current movement is likely to be cyclical and until the RBA make a cut actual, the AUD will not push to and hold at or below 68c. Thus it is likely to remain in its tight band of 70c-73c.<\/p>\n<p><strong>By <\/strong><a href=\"https:\/\/www.fpmarkets.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>FPMarkets.com<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By FPMarkets.com Like rats on a sinking ship, one by one we saw economist after economist jumped off the Australian hike path and onto the cut bandwagon. The market too followed suit the interbank market is now fully pricing in a 25-basis point (bps) cut by December 2019 with a 50% chance of a further [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-143350","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/143350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=143350"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/143350\/revisions"}],"predecessor-version":[{"id":143351,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/143350\/revisions\/143351"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=143350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=143350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=143350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}