Fundamental Summary

Sales of New Motor Vehicles Full Report
The September 2016 trend estimate (99 294) increased by 0.4% when compared with August 2016.
When comparing national trend estimates for September 2016 with August 2016, sales for Sports utility vehicles and Other vehicles increased by 1.6% and 0.1% respectively. By contrast, sales for Passenger vehicles decreased by 0.4%.
The largest upward movement across all states and territories, on a trend basis, was in Tasmania (2.9%).
The largest downward movement across all states and territories, on a trend basis, was in the Australian Capital Territory (-1.0%).

Labour Force Full Report
In September 2016, trend employment increased by 3,900 persons to 11,959,500 persons – a monthly growth rate of 0.03 per cent. This is down from the monthly employment growth peak of 0.28 per cent in September 2015. Trend part-time employment growth continued, with an increase of 11,800 persons, while full-time employment decreased by 7,900 persons.
The trend monthly hours worked increased by 2.2 million hours (0.1 per cent), though it is still below the high in December 2015.
The trend unemployment rate decreased slightly (by less than 0.1 percentage points) to 5.6 per cent, and the participation rate decreased 0.1 percentage points but remained steady at 64.7 per cent in rounded terms.
The seasonally adjusted number of persons employed decreased by 9,800 in September 2016. The seasonally adjusted unemployment rate for September 2016 decreased by 0.1 percentage points to 5.6 per cent, and the seasonally adjusted labour force participation rate decreased by 0.2 percentage points to 64.5 per cent.

Inflation and Monetary Policy Full Report
This week Governor Phillip Lowe made his first speech as Governor of the Reserve Bank of Australia and addressed Citi’s 8th Annual Australian & New Zealand Investment Conference. A very important speech that anyone trading Aussie should read and take note of. In the speech Lowe discussed the cause for low global inflation among major advanced economies, “Low inflation outcomes globally and in Australia are coexisting with low wage outcomes. In many industrialized countries, wage growth has been close to multi-decade lows and below what historical relationships with the unemployment rate would suggest.” Lowe identified three main factors namely low inflation reflects the economic slack in the global economy, a self-reinforcing dynamic originating from the decline in headline inflation caused by the fall in commodity prices, including oil prices and a shift in the perceived pricing power of many workers and businesses driven by the globalization of markets and technology. Lowe set out more flexible inflation targeting, “We have never thought of our job as keeping the year-ended rate of inflation between 2 and 3 per cent at all times. Indeed, since June 1993, CPI inflation has been below 2 per cent for 24 per cent of the time, and coincidentally above 3 per cent for 23 per cent of the time. What is important is that we deliver an average rate of inflation consistent with the medium-term target.” The degree of variation in inflation will focus on employment and the stability of the financial system. “To be clear, our core objective is to deliver a rate of inflation that averages between 2 and 3 per cent over time. But we want to do that in a way that best serves the public interest. A flexible medium-term inflation target, paying close attention to the labor market and keeping a wary eye on balance sheets in the economy is the best way of doing this. This framework has served Australia well for more than two decades now. And, in my view, it remains the right monetary policy framework for Australia.” Focus will be placed on next week’s CPI report. Developments in job market and the housing market are also being watched closely.

RBA Meeting Minutes Full Report
Chinese demand for commodities has been resilient. Reduction in the supply of commodities has contributed to an increase in commodity prices since the turn of the year. GDP growth was expected to decline somewhat in the near term before rising gradually. Continued uncertainty about the momentum of labor market. Part-time work accounts for all of the increase in employment over the year to date. Growth in employee earnings has stabilized. Consistent with less downward pressure on earnings associated with the movement of labor from mining to the non-mining sectors of the economy. Members assessed that while the risks associated with rapid growth in housing prices and lending had receded over the past year, developments would need to be monitored closely. Since the September meeting, the data on the domestic economy had been broadly consistent with the forecasts presented in the August Statement on Monetary Policy, though an appreciating
exchange rate could complicate this. Members noted that data on CPI inflation for the September quarter and an update of the forecasts would be available at the next meeting. This would provide an opportunity to consider the economic outlook, assess the effects of previous reductions in the cash rate and review conditions in the labor and housing markets.

Commitment of Traders Report
The most recent COT report released on Friday shows a further increase in long positions and a slight increase in short positions with the price closing higher at the end of Tuesday last week than the week before. Note this COT report was written before the jobs data was released on Thursday.

Upcoming Tier 2 and 3 Data Releases
Wednesday: CPI
Friday: New Home Sales, PPI

AUDUSD and AUDJPY Technical Summary

AUDUSD Daily

At the start of the month price opened moved up and bears sold at MM3 coinciding with the top of the range. Price fell to MM2 coinciding with the bottom of the range. Price moved back up to the top of the range and traded slightly higher to highs last seen at the start of September. Release of poor jobs data saw profit taking and continued selling on Friday pushed price back down just below the central monthly pivot point.

AUDUSD H4

At the start of the week price moved down from open to the weekly central and then rallied encountering resistance just below MM3 at the top of the range on the daily chart. Price broke through, hit WR2 moments before the release of the jobs report and then profit taking and continued selling on Friday pushed price down to the weekly central.

AUDJPY Daily

At the start of the month price moved up and encountered resistance at 79.00. Bears drove price down to the 21 EMA and then back up to 79.00. Price broke through 79.00 on the 14 October, reached 80.00 which coincided with MM4. Profit taking saw price drop to role reversal MR1 where bulls entered and drove price back up to 80.00/ MM4 moments before the release of the jobs report. Profit taking and further selling on Friday drove price down just below 79 and at role reversal support of the breakout on the 14 October.

AUDJPY H4

Profit taking at the start of the week saw price drop to the weekly central where bulls entered and drove price up to 80.00/ MM4. Profit taking saw price drop to the 21 EMA where bulls entered and drove price back up to 80.00/ MM4 moments before the release of the jobs report. Profit taking and further selling on Friday drove price down to the weekly central.

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