Australia reported a dramatic surplus in iron ore and coal shipments with exports beating imports by $19.3 billion for 2011...
Australia reported a dramatic surplus in iron ore and coal shipments with exports beating imports by $19.3 billion for 2011. The surplus increased $1.71 billion resulting greater than economists’ expectations of $1.2 billion. The outcome supports the Reserve bank of Australia’s (R.B.A.) prediction that Chinese demand for the country’s commodities will support demand as global economic growth slows. Australia has been able to avoid a recession for the past 20 years due to external demands of the country’s commodities. Additionally, the R.B.A. lowered the overnight cash rate to 4.25% based on “considerable turbulence” in the economy as European issues continue.
The Australian Bureau of Statistics (A.B.S.) reported today that monthly building approvals fell (based on seasonal adjustments) 1.0% in December as total dwelling units came in at 11,443. Analysts had forecasted a 2.0% increase in December as November had seen a 10.0% monthly increase. Approvals picked up in Queensland but were negated by slowdowns in South Australia and Victoria. On an annualized basis approvals dropped 24.5% in December, less than economists’ projections of a 22.1% decrease as November had been upwardly revised to a 17.5% contraction. The Bureau attributes recent figures to a combination of government stimulus actions as well as recent weather incidences as both have likely caused only a certain number of buildings to be approved as well as increased value for what has been approved. Furthermore, estimates for all building approvals increased 1.9% for December after decreasing 0.5% in November.
The AUDUSD is testing the six month high level of 1.0750 despite weakness in the global economy. The Aussie has been one of the best performing currencies against the Dollar and the long term trend is bullish on the pair. If the pair breaks above 1.0750, we expect the pair to target 1.1000 over the next three months.
Eugene Ross, Analyst
Admiral Markets
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