AUD/USD – The Australian Dollar Steady on Data

AUD/USD (0.7190)

Some points to consider in this Forex market:

• Australia releases corporate profits data which were up 1.3 percent in the third quarter (Q3). This tops forecasts of a one percent expansion.
• Australia also releases inventory numbers which were up 0.1 percent, above estimates but showing a slowdown from the previous quarter (Q2).
• The Australian Dollar fails to find support with this good data as traders are waiting on the Reserve Bank of Australia’s (RBA) policy announcement.

The Australian Dollar throughout most of its currencies pairs failed to find support after the release of better than expected economic data this morning. This was the case with the AUD/USD as well as quarterly corporate profits for Q3 came in at a 1.3 percent gain. This number beat expectation for a one percent rise. This also marked recover after last quarter’s decline of 0.5 percent.

Inventories Come out Better than Expected

Australia also released company inventory numbers this morning. This number came in better than expected as inventory stockpiles were up 0.1 percent. Expectations were for a flat reading but the number was below the previous quarter’s 0.2 percent gain.

Overall, the Australian Dollar showed a rather tepid and weak reaction to today’s economic data. Traders are waiting on tomorrows RBA monetary policy announcement which is scheduled for 0330 GMT. Traders are expecting for the RBA to keep interest rates steady with the benchmark lending rate to remain at two percent. We are expecting to hear from the accompanying statement to carry more market moving forward guidance. Australia’s economic conditions have not changed enough to warrant a move from RBA Governor Glenn Stevens. He and his fellow policy makers are likely to be in a wait-and-see mode as they adopt a neutral monetary policy along with a neutral statement. The policy statement should echo the dependence on data for future action. This should shift the spotlight from the policy decision to the end of the week’s release of their gross domestic product (GDP).