Overnight the Australia Dollar gave back all the ground it took yesterday and more; and it continues to remain in a state of weakness against the majors.
The Australian Dollar made some gains for the first time in over a week yesterday following the release of positive Chinese data. The Manufacturing PMI in China was expected to be a neutral 50.0 figure, however, an actual figure of 50.5 was produced. This provided the AUD an opportunity to push north (by close to half a percent against the majors) over the following few hours of trading.
German and Euro-Zone Purchasing Managers Index figures relating to the Services and Manufacturing industry were announced last night. The economic forecast was that the figures would be in line with the previous months result and the expectation came to fruition. Much of the focus this evening in the Euro-Zone will be concentrated towards the German IFO Business Climate release.
Across the Atlantic the Canadian Dollar has enjoyed a strong rally against the Australian Dollar over the past few weeks, surpassing parity to become the stronger currency at present. Yesterday we saw the AUD claw back some of the ground it had lost to the ‘Loonie’ over the past few weeks, however it gave back all the ground overnight despite the Canadian Retails Sales figures for the month of July being weaker than expected.
The US Manufacturing PMI for September was released last night and the expectation was that we would see a slight expansion to this sector with a figure of 58.0 expected. The printed figure was very close to expectation at 57.9, causing the Greenback to continue its’ rally. The Australian Dollar is still appearing vulnerable against the US Dollar, with the exchange rate still around the lowest it has been since January this year. Strong economic data relating to New Home Sales in the US is scheduled to be announced tonight. If the result is as expected then it is likely that we will see the current trend of US Dollar strength continue.
There is only low-level economic data release out of Australia today to grace the currency markets, in what is a relatively quiet week on the domestic front. There has been a clear and definitive trend over the past couple weeks of a falling Australian Dollar, with many economists perceiving the decrease in strength as a ‘correction to the AUD value’. We may continue to see further movements down by the AUD this week if strong international economic data is released by the various leading countries. Weaker than expected releases however will likely provide temporary support to the currently vulnerable Australian Dollar.