Trade Desk Thoughts - Australia MI Leading Index

Australia MI Leading Index (Aug) Actual 0.2%, Previous 0.1%

Release Explanation: The release considers eight indicators in the calculation of the index: money supply, share prices, rural goods exports, building approvals, sales to inventories ratio, gross operating surplus, yield spread, and medium-term government bond yields. The index is calculated as a percent change off a base year; headlines report the figure in a percent change from the previous month.

Trade Desk Thoughts: The annualized growth rate in Australia has slowed for the second month in a row, thus reinforcing the RBA’s view that their 17 years of economic expansion is cooling down enough to provide some relief by cutting borrowing costs. The annualized growth rate slowed to 3.7 percent in July from a 4 percent reading in June. Governor Glenn Stevens recently cut borrowing costs for the first time in seven years to 7.00 percent.

Forex Technical Reaction: The Australian dollar has risen over 100 pips from the open and has found resistance at the R1 LFB pivot point at .8057 level.

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