Release Explanation: The Australian AIG Index (services and manufacturing) is a seasonally adjusted composite index based on the diffusion indexes for production, new orders, deliveries, inventories and employment. Each category has its own weight correspondent to its effect on the economy. A reading above 50 indicates expansion, while a reading below 50 indicates contraction. The distance from 50 is indicative of the strength of the expansion or decline.
Trade Desk Thoughts: The Australian AIG services sector activity has declined for a ninth consecutive month in the services sector for December showed the Australian Industries Group’s report. The index rose marginally, by 1.5 points to 39.3 but remained below the key 50.0 level which separate’s expansion from contraction. In seasonally adjusted terms, only one sector saw expansion, health and services, for the first time in five months. Sales fell for a seventh month while activity fell even faster for accommodation, cafes and restaurants, as well as the personal and recreational services sectors.
Forex Technical Reaction: The aussie has not reacted significantly from this release. Price is slightly below the neutral LFB pivot point at .7135.
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