AUD/USD is steady on Monday, as the pair trades in the low-0.93 range early in the North American session. On the release front, Australian New Motor Vehicles fell 1.3% in July, marking a six-month low. The markets are keeping a close eye on the RBA policy meeting minutes, which will be released early on Tuesday.
With the US continuing to suffer from low inflation levels, markets expectations have been low for key inflation indicators. On Friday, PPI, the primary gauge of inflation in the manufacturing sector, slipped to 0.1%, down from 0.4% a month earlier. This matched the estimate. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy. Meanwhile, US Preliminary UoM Consumer Sentiment slipped to 79.2 points, its lowest level since October. This follows weak retail sales numbers earlier in the week. This means that an improvement in the US labor market has not translated into stronger consumer confidence and spending, which are critical for economic growth.
Elsewhere in the US, Unemployment Claims came in higher than expected. The indicator climbed to 311 thousand, marking a six-week high. The estimate stood at 307 thousand. Employment indicators are being closely scrutinized by analysts, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed. Earlier in the week, JOLTS Job Openings hit its highest level in 13 years, although it too missed expectations.
Australian confidence indicators looked solid last week, helping the Aussie hold its own against the US dollar. Westpac Consumer Sentiment climbed 0.8%, its strongest gain since October 2012. Earlier in the week, NAB Business Confidence reached 11 points, its fourth straight increase. Stronger confidence levels should translate into increased economic growth, which would be positive news for the Australian dollar.
AUD/USD 0.9318 H: 0.9328 L: 0.9309
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