On top of all this, markets have been generally risk-off and this has already been putting some pressure on the local currency. September retail sales came in much better than expected at 1.3% (versus 0.3% expected), while the trade deficit widened to $2.26 billion (versus -$1.78 billion expected).
The initial reaction in the AUD was positive, with a minor bounce initially. However, at the same time the ABS released revised seasonally adjusted jobs estimates for the period December 2013 to September 2014. These estimates have been calculated using a new seasonal adjustment method identified in the review. The data showed unemployment was actually a bit higher at 6.2% and this was seen as bearish by the market.
Sellers likely to take advantage of strength
This saw AUD/USD drop to $0.8646, which was within touching distance of early October lows. The move turned out to be temporary as the pair bounced shortly after and is now testing $0.8700 again. It is clear there is a bearish bias to the pair at the moment and I suspect strength will be used as a selling opportunity. Heading into the RBA decision, we might see some consolidation for now. No change is expected from the meeting and, as usual, the statement will be watched for any change in language. Once this is concluded, sellers might be looking to come back into the market.