An index level of 50 denotes no change since the previous month, while a level above 50 signals an increase or improvement, and below 50 indicates a decrease or deterioration. Gauge for goods sold at retail outlets in the past month. Retail Sales is a leading indicator for the economy. Rising consumer spending fuels economic growth, confirms signals from consumer confidence, and may spark inflationary pressures.
Describes the flow of all goods and services, income, and transfer payments to and from Australia. This figure acts as a gauge of how Australia 's economy interacts with the rest of the world. Whereas the other side of the Balance of Payments, the Capital and Financial Accounts, deals mainly with financial assets and investments, the Current Account gives a detailed breakdown of how the country intermingles with rest of the global economy on a practical, non-investment basis.
The Current Account is comprised of the value of the trade balance exports and imports for goods and services , income payments such as interest, dividends and salaries and unilateral transfers aid, taxes, and one-way gifts. A positive value current account surplus indicates that the flow of capital from these components into Australia exceeds the capital leaving Australia.
A negative value current account deficit means that there is a net capital outflow from these sources. Persistent Current Account deficits may lead to a natural depreciation of a currency, as trade, income and transfer payments usually reflect Australian dollars leaving the country to make payments in a foreign currency just as underlying surpluses act as an appreciating weight.
There are a number of factors that often work to diminish the impact of the Current Account release on the market. The report is not very timely, released every quarter. In addition, many of the components that lead to the final Current Account production and trade figures are known well in advance. Lastly, since the report reflect data for a specific reporting month, any significant developments in the Current Account should plausibly have been felt during that quarter and not during the release of data.
It gives a detailed picture of how the Australian economy interacts internationally, breaking down these interactions into separate components that can be tracked and often anticipated. Thus, the weight of the Current Account has led it to historically be one of the more important reports out of Australia.
The statement contains the latest decision regarding changes to the countries short term interest rates, monetary policy, and the direction of the economy. Short term interest rates are the paramount factor in currency valuation. A hawkish statement could boost the currency where a dovish statement could lower the currency's valuation.
Gauge for the overall performance of the country's service sector. The Services PMI interviews executives on the status of sales, employment, and their outlook. Because the performance of the country's service sector is extremely consistent over time, services does not impact final GDP figures as much as the more volatile figure on the manufacturing sector.
For this reason Services PMI usually causes little market movement. The survey results are quantified and presented as an index on a scale. The headline figure is the percentage change in the index. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues. As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person.
Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy. The headline figure is expressed as the percentage change from the same month last year. The figure appears in headlines as the Current Account balance in billions of Aussie Dollars.
The panel has been carefully selected to accurately replicate the true structure of the services economy. The Markit Services PMI Index is developed for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. It uses this as the instrument for monetary policy, and influences the cash rate through its financial market operations.
Decisions regarding the cash rate target are made by the Reserve Bank Board and explained in a media release announcing the decision at 2. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
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