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Australian Dollar – Stuck Up With The Push and Pulls

November 13, 2012 in Forex Analysis

AUD/USD remains in the short-term pricing channel since the beginning of October and without showing the signs of any good volatility. The price generally has been finding support near the 55-day EMA and well above the 220-day moving average. On October 23rd when it fell strongly to break 55-day EMA support, the support came just below 22-day moving average.

AUD/USD - recent price action

Australian Dollar, being a commodity currency fluctuates greatly with the total global economic outlook and also from the economic outlook from China.

The Push – China Economic Data

The recent economic data from China has been generally encouraging. The Chinese exports grew in October by 11.6% which was much better than the market estimates of 10%.

Though Copper imports fell by 16%, on year on year basis, in October but the Oil and Iron Ore imports rose 14% and 13% respectively. This reflected in the consecutive 5th weekly rise in the iron ore prices which went up to US$ 122 per metric ton.

The electricity generation rose to 397.5 billion kWh which was 6.5% rise on year-on-year basis and that reflected in the rise in coking coal prices. The increase in coking coal price was  4.7% during the last week when it went up to US$ 157 per metric ton.

Australian Dollar and Chinese Data

Iron ore contributed to 20% of total Australian exports during the last year. Any increase in the demand and prices go straight in favor of the Australian Dollar. Coal contributed 15% of Australian exports in 2011 and the rise in demand and prices are again being reflected in keeping the AUD/USD well abobe 200-day moving average and also 55-day EMA.

iron ore spot prices newcastle coal prices

*Source: ANZ Research (ANZ.com)

The Pull – Euro Zone

The ongoing Greece bailout uncertainties have been keeping the market sentiments mixed for long and the recent cut down of the growth forecast of Euro zone for 2013 added to the overall bearish side of the sentiments. European commission has cut down the growth forecast from previous 1% to 0.1% for 2013. The growth forecast fro Germany was also cut down to 0.8% from 1.7%.

What do we have today:

Yesterday’s home loans data came out poor from Australia. The change in home loans dropped to 0.9% in September from the previous 1.8%. The market estimates were for a change of 1%.

Today we have ZEW economic confidence survey reports from European Monetary Union as well as Germany. ZEW reports are scheduled to be released at GMT 10:00. We also have Monthly budget estimates from the U.S. to be released at GMT 19:00. Westpac Consumer confidence report from Australia is scheduled at GMT 23:30 today.

Any unexpected data from the above may cause a change in the volatility of AUD/USD to higher side. If that does not happen that the pair may keep the same pace under the psychological level of 1.0500.