Australia: Recovery looking more robust - AmpGFX

Greg Gibbs, Analyst at Amplifying Global FX Capital, explains that one of the most upwardly mobile currencies on Monday was the AUD, busting up through 0.76 that had capped the currency over the last month as economic reports released on Monday point to solid underlying economic momentum.

Key Quotes

“Job ads rebounded 1.5%m/m in May, after drifting lower by a total of 0.7% over the previous three months, to be up a sold 11.5%y/y.”

“From the business indicators report that provides components for the GDP Report (Due on Wednesday), company profits rose 5.9%q/q in Q1, more than 3.0% expected, up 5.8%y/y, supported by stronger mining income, indicative of higher commodity prices.”

“Wages and salaries rose 0.8%q/q and 5.1%y/y, the fastest rate since 2012, indicative of strong employment growth, and stabilizing wage growth, which should be a support for household consumption.”

“Inventories rose 0.7% q/q, more than an expected outcome of no change.  Combined with the higher measures of national income, higher inventories should boost market expectations for the GDP report.”

“Typically economists await the current account data due later today before updating their GDP forecasts.  The median expectation reported on Bloomberg ahead of these data was 2.7%y/y.  There is every reason to see a higher outcome.”

“April retail sales also managed to beat expectations; up 0.4%m/m (somewhat above 0.3% expected). Sales value is up a modest 2.6%y/y, but up a more solid 4.3% annualized rate over the last three months.”

“Inflation indicator firmer

The Melbourne Institute monthly inflation indicators also suggest that inflation may be a bit higher than the national quarterly data.  The headline rose 2.1% 3mth/yoy in May (above the CPI up 1.9%y/y in Q1).  The MI trimmed mean rose 2.0% 3mth/yoy in May (above the CPI trimmed mean up 1.9%y/y in Q1).”