The Australian dollar traded in a limited yet high range during December, sticking to the high end of the wide range. Signs of improvement from China have helped the Aussie, as well as a strong jobs report at home.
During January, China will have a strong impact on A$. The economic giant and Australia’s main trade partner will release GDP figures for Q4, before any other major economy. In addition, the RBA does not hold a meeting during this month, so speculation will have to wait to the next one.
* This article is part of the January 2013 monthly forex report. You can download the full report by joining the newsletter in the form below.
The drop of the unemployment rate from 5.4% to 5.2% was a very pleasant surprise, and countered the rate cut seen in early in December. The report shows that the situation of the Australian economy, also outside the mining sector, is not that bad, despite the weak PMIs.
The employment report and building approvals are of high importance. The housing sector has already seen better days and some improvement is needed in this sector.
Another thing to note is that the Swiss National Bank has moved its focus from Australia and is now putting its eyes on the UK. Diversifying away from euros into A$ has pushed the latter higher, but there was some “hangover” afterwards.
The RBA does not like the strength of the Aussie and has supposedly performed some sort of “passive intervention”. It is unclear if there was any effect on the Aussie.
All in all, the Aussie could see a good month in January, but it is unclear if it can break above the tough 1.06 line.
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