Aussie dollar firm ahead of data deluge

The Australian dollar is trading at US$1.0481 at the time of writing in early afternoon Asian trading. The strength comes as the market remains unclear on whether the RBA will cut rates next week. City Index’s view remains unchanged and has so over the past few months – a February cut is the most likely scenario in the order of around 25 basis points. There seems to be some good momentum between now and then given 1) The successful completion of Greece talks this week and 2) Growing optimisms around China and a slight recovery in base metal prices including copper.

That should provide enough puff for the Australian dollar so perhaps test September’s highs near the US$1.0624 mark. But the next 48 hours will be crucial. Tonight will see the release of durable goods orders, consumer confidence and house price data in the United States. Tomorrow we will get a glimpse into Bernanke’s beige book and on Thursday the two biggest data points all week – official GDP numbers and jobless claims out of the United States and somewhere in the background a read on corporate profits.

The table below summarises the key US data and consensus numbers to keep an eye on with our key notes:

Tuesday

1:30PM US Durable Goods Orders (est. new orders -0.8% vs. 9.9% previous)

Notes: Very wide consensus band range. Anything in the +% range will please the market, watch for prior revisions if any.

3:00PM US Consumer Confidence (est. 72.8 vs. 72.2 previous)

Notes: Anything below last month’s number will be poorly received; even a 72.5’ish number is not good enough. Consumption is a large part of US GDP.

3:00PM US FHFA House Price Index (est. 0.5% vs. 0.7% previous)

Notes: Market not too worried here, price measurements well monitored.

Wednesday

3:00PM US New Home sales (est. 387k vs. 389k previous)

Notes: Market more interested here, number still coming off a very low base. Need to see it build back up to the 500k by the first quarter of next year.

7:00PM US Beige Book

Notes: Eight times a year, every six weeks. First sniff at real effectiveness of QE3. Is Bernanke going on an early Christmas holiday?

Thursday

1:30PM US GDP (est. 2.8% vs. 2.0% previous)

Notes: Need a number as close to 3% as possible and again watch the prior revision, hopefully not on the downside again. Consensus range is 2.40-3.0% so a 3% plus number would be huge for the market

1:30PM US Jobless Claims (est. 390k vs. 410k previous)

Notes: Big spike last few weeks which needs to be reversed with a solid sub 400k number, closer to 350k will really please the market.