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Australian dollar mostly lower as Chinese data disappoints

Australian dollar daily update

BY DEB SHAW | 

Australian dollar daily update

The Australian dollar is mostly lower against major currencies today. The Aussie is currently selling off against the US dollar, the euro and the Canadian dollar, while trading sideways against the Japanese yen and the British pound. Yesterday, AUD/USD initially moved up during Asian trading hours, but fell in the latter half of the day. 

Turning to recent developments, local news had a limited impact on the currency. RBA Assistant Governor Debelle did not make any remarks directly relating to the currency. Similar to previous remarks, he warned that housing remains a significant risk, while suggesting confidence in the country's economic recovery. The RBA's minutes did not include any new information either. Similar to previous communications, the RBA stated that the next move in interest rates was up, and not down. The Bank also said that any appreciation in the currency would weigh on future growth and inflation. 

Instead of domestic news, AUD is trading as a function of international developments. More specifically, recent data from China was disappointing. Year-over-year fixed asset investment and retail sales both missed estimates. Looking at Chinese financial markets, Hong Kong's Hang Seng Index is currently selling off. China-sensitive commodities such as industrial metals and copper are also weakening. Given Australia's significant trading relationship with China, the Australian dollar is mostly weaker as a result. Our short-term outlook and medium-term outlook on the Australian dollar remains bearish. 

AUD/USD is down slightly and trading just above 0.7510. EUR/AUD is up and trading above 1.5860. GBP/AUD is flat and trading above 1.80.

In this week’s Australian dollar economic calendar, we’ll see employment data. RBA Assistant Governor Debelle did not address the Australian dollar in his speech, while the RBA’s latest meeting minutes suggested a continuation of the status quo. Tomorrow, we’ll see the wage price index for Q1. On Thursday, we’ll see employment changes for April and the associated unemployment rate. Last week, March retail sales missed expectations by a wide margin.

Updated 
Outlook
Bearish

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