Australia Leading Index Up Slightly But Fails To Support AUD

By Lujia Lin,

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THE TAKEAWAY:Conference Board Australia Leading Index rises slightly >Markets looking ahead to European and US data later in the day> Aussieweakens

The Australian Dollar was lower despite a modest rise in an index of leading economic indicators as markets remain subdued ahead of data on European PMI and US durable goods orders. Immediately following the release, the Aussie was at 0.9833 versus the US Dollar from 0.9843.

The Conference Board reported late on Tuesday that its Leading Economic Indicators Index rose 0.1 percent in September, the first positive monthly change since July’s revised 0.1 percent increase. The monthly change for August was revised down from -0.1 percent to -0.2 percent. Tuesday’s positive reading was led by higher corporate profits, building approvals, and rural goods exports. Share prices on equity markets accounted for the biggest drag on the index.

Amid rising yields on European sovereign bonds and ongoing concern that the crisis is spreading beyond the GIIPS countries, the Aussie will remain highly susceptible to external event risk. However, domestic factors – especially rate expectations – will continue to play a role in shaping the currency. With the RBA earlier this month cutting its growth and inflation forecasts for 2011 and 2012, swap markets are now pricing in certainty that the central bank will continue to lower rates following a 25 bp cut on Nov 1, according to Credit Suisse data.

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Original Article: http://www.dailyfx.com/forex/market_alert/2011/11/22/Australia_Leading_Index_Up_Slightly_But_Fails_to_Support_AUD.html