Aussie Takes It On the Chin

Weaker than expected Chinese data has added to market unease allowing the big dollar to end the week on firmer footing. Guilty by association has the antipodean currencies struggling outright. The Aussies in particular have had a sharp deterioration of survey data last month, including three sectoral PMI readings, job and wanted ad surveys and a NAB Business Conditions print. The RBA’s dovish stance is slowly reducing the currency’s yield spread advantage, adding to the impact of fears of a hard landing in China. The market continues to price in another-50bp cut by Governor Stevens. The fears of a Chinese hard landing has the market building on this negative momentum to trade below Aussie parity outright where weak stop losses again are positioned.

Below are some other highlights of the week:


  • INR: The Reserve Bank of India late last established week new measures to ease foreign currency flows. First, the interest rate ceiling on Foreign Currency Non-Resident deposits has been raised from +125bps above LIBOR to +200bps above for maturity periods of 1-3 years and to +300 bps above LIBOR for maturities of 3-5 years. Second, the ceiling rate on export credits denominated in foreign currency has been deregulated by allowing banks to freely determine the interest rates on such credit.
  • AUD: Aussie retail sales rose for the third straight month in March. Sales rose +0.9%, m/m, compared with a revised +0.3% rise in February.
  • AUD: Building approvals rose sharply in March, rising +7.4%, m/m, to mark a rebound from an -8.8% drop in February. The NAB Business Confidence rose to +4 points in April from +3 in March. However, jobs ads fell -3.1% on the month, this after a +0.7% gain in March. The AiG Performance of Construction Index also fell to 34.9 in April from 36.2 in March.
  • TWD: Taiwan’s April exports contracted even further, by -6.4%, y/y. This is proof that growth momentum remains weak.
  • AUD: The Aussie trade deficit widened in March to the biggest in five-years as a +5%, m/m, rise in imports outpaced export growth of +2%. Australia posted a seasonally adjusted trade deficit of +AUD1.6b in March from a +AUD754m deficit in February.
  • AUD: The Australian government presented a budget aiming to deliver a surplus in the 2012-13 financial year in line with expectations. Although the target is only a small surplus at +AUD$1.5b, fiscal tightening suggests scope for further rate cuts from the RBA.
  • AUD: Aussie price action this week has been weighed down somewhat by the Australian PM Gillard’s comments that the budget gives the RBA “maximum room” to move on interest rates.
  • KRW: Korean bank lending to households rose to +KRW453.6t last month from +KRW452.3t in March. High household debt is likely to keep the BoK from cutting policy rates any time soon.
  • AUD: Aussie unemployment rate unexpectedly dropped to a one-year low as payrolls rose for a second consecutive month, The jobless rate fell in April to +4.9%, from +5.2%, m/m. Payrolls advanced by +15.5k after a downwardly revised +37.6k gain in March. Report numbers certainly support a “wait-and-see approach” by the RBA.
  • CNY: China’s export growth was weak, falling to +4.9%, y/y, in April from +8.9% in March. Despite the large trade surplus on the surface appearing to be good news, the +$18.4b (+$5.4b in March) is largely a result of weak import numbers. Investors will see this as a significant slip from Chinese domestic demand “for” the rest of the world.
  • NZD: The Kiwi REINZ Housing Price Index fell -0.3% last month compared with a +1.9% rise in March.
  • JPY: Japan posted a Â¥1.589t (USD$19.9b) current account surplus in March, down from Â¥1.18t in February. Bank lending has fallen to +0.3%, y/y, in April from +0.8% in March.
  • KRW: The BoK The Bank of Korea kept rates unchanged at +3.25% as widely expected and have reduced its 2012 growth forecast for the country to +3.5% from +3.7%.
  • CNY: China’s April growth numbers disappointed. IP slowed down to +9.3%, y/y, from +11.9%, falling well short of the +12.2% forecast. This marks the first single-digit print in three years.
  • CNY: China’s annual CPI moderated in April despite strong food price rises, falling to +3.4%, y/y, from +3.6% in March. This would suggest that domestic demand remains soft, and backs up the weak export numbers this week. Not good news for Antiopodean currencies.






  • Retail Sales data is released in NZD and USD
  • Monetary Policy minutes and rhetoric comes from AUD, GBP and USD
  • EUR, CAD and USD presents inflation reports
  • Claims data is produced by GBP and USD
  • Growth numbers come from JPY
  • EUR has its economic sentiment, USD finishes with Philly Fed Manufacturing


Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell